Mediation in Bankruptcy

The Federal Judicial Center Survey of Mediation

Participants

Report to the Advisory Committee on Bankruptcy Rules

of the Judicial Conference of the United States

Robert J. Niemic

Federal Judicial Center

1998

This Federal Judicial Center publication was undertaken in furtherance of the Center’s

statutory mission to conduct and stimulate research and development for the

improvement of judicial administration. The views expressed are those of the author

and not necessarily those of the Federal Judicial Center.

This document does not represent the policy of the Judicial Conference of the

United States or the Advisory Committee on Bankruptcy Rules.
This page left blank intentionally for proper pagination when printing two-sided
iii

Contents

Acknowledgments v

Executive Summary 1

The Questionnaire 1

Findings 1

Report on the Survey 5

Purpose of the Survey 5

Background 5

Committee’s Request for a Survey 7

Survey Design 9

Survey Results: Respondents to the Questionnaire 10

Survey Results: “Problems” Identified by Respondents 14

Survey Results: Other Issues Identified 28

Potential Issues for Committee Consideration 34

Appendix 1: Questionnaire 35

Appendix 2: Methods 49

Appendix 3: Summary of Respondent Comments 53

Appendix 4: Possible Second Phase of Survey 63
This page left blank intentionally for proper pagination when printing two-sided
v

Acknowledgments

The survey on mediation in bankruptcy was conducted by the Federal Judicial

Center on behalf of the Alternative Dispute Resolution (ADR) Subcommittee of

the Judicial Conference’s Advisory Committee on Bankruptcy Rules. Members

of the ADR Subcommittee are Professor Charles J. Tabb (subcommittee chair),

University of Illinois College of Law; District Judge Bernice B. Donald; District

Judge Adrian G. Duplantier (ex officio as committee chair); District Judge

Robert W. Gettleman; Neal Batson, attorney, Atlanta, Georgia; Leonard M.

Rosen, attorney, New York, New York; and Professor Alan N. Resnick

(reporter), Hofstra University School of Law. The subcommittee helped

identify issues to be studied and questions to be asked in the questionnaire.

A special acknowledgment goes to Donna Stienstra and Elizabeth C. Wiggins

of the Research Division of the Federal Judicial Center for their advice

throughout this project. The project team included George W. Cort, Melissa

Deckman, Aletha D. Janifer, Yvette L. Jeter, Jackie Morson, Melissa J. Pecherski,

Randall E. Ravitz, and Carol E. Witcher.
This page left blank intentionally for proper pagination when printing two-sided
1

Executive Summary

At its March 1997 meeting, the Advisory Committee on Bankruptcy Rules asked

the Federal Judicial Center to collect empirical information to help the committee

determine whether to consider rules changes that would govern mediation of

bankruptcy matters. The committee has not taken a position on the use of mediation in bankruptcy.

The Questionnaire

The Center developed a questionnaire to determine the extent and severity of any

problems regarding mediation conducted after judicial referral. (See Appendix 1.)

For the survey mailing, we obtained names and addresses of counsel and mediators who had participated in the mediation of one or more bankruptcy matters

after judicial referral pursuant to local bankruptcy rules or procedures during the

three-year period before May 1997. These matters were in eighteen of the twenty

bankruptcy courts that during the relevant time period had local rules or procedures on mediation and had referred at least one matter to mediation.1

 In July

1997 we mailed the questionnaire to almost all these counsel and mediators (1,992

recipients).2

Findings

As of November 15, 1997, the response rate to the questionnaire was 64%. This

report is based on those responses. The number of mediated matters3

 participated

in by 1,043 counsel-respondents was between 1,054 and 2,1084

 and the number of

matters participated in by 440 mediator-respondents was 1,480.

Problems Reported

In designing the questionnaire, the committee’s ADR subcommittee and Center

staff identified several areas where mediation participants might have observed or

perceived problems in the mediations in which they participated. For each problem area asked about in the questionnaire, respondents reported that the problem

 

1. The bankruptcy clerks in the District of Colorado and the Northern District of Texas informed us that those courts do not maintain any information on matters referred to mediation.

2. Because of the large number of matters referred to mediation in the Central District of

California, we surveyed only 50% of the practitioners who had participated in mediation in that

district during the study period.

3. Weighted data. See Appendix 2: Methods.

4. An unknown number of matters identified by certain counsel-respondents are duplicates of

matters identified by other counsel-respondents. To account for these duplicates, we present a

lower bound (which is 50% of the number of matters reported by counsel-respondents) and an

upper bound (which is the total number of matters reported by counsel-respondents). The confidentiality of the mediation process prevented us from including information on the questionnaires

that would identify particular matters.
National Survey on Mediation in Bankruptcy

2

occurred in 2.5% or less of the matters referred to mediation. The breakdown of

occurrence rates by problem area is shown under “Problems Reported” in Table 1.

Table 1

Rates at Which Certain “Problems” or Events Were Reported

(N = 1,289 Respondents) (weighted data)

Rate of Rate of

Occurrence in Occurrence in

Counsel-Respondent Mediator-Respondent

Matters* Matters

(N = 1,054–2,108 Matters) (N = 1,480 Matters)

Problems Reported

Mediator disclosure of confidential information 0.9%–1.8% 0.4%

Party disclosure of confidential information 1.2%–2.4% 0.6%

Confidentiality affecting judicial approval of settlement 0.8%–1.7% 2.3%

Ex parte contacts between mediator & judge 0.4%–0.8% 0.3%

Mediator failure to disclose conflict of interest 0.5%–1.0% 0.1%

Mediator bias or prejudice 0.4%–0.7% 0.1%

Mediator not a “disinterested person” 1.2%–2.5% 2.3%

Rule 5002(b) connections between mediator & judge 0.9%–1.7% 0.1%

Rule 5002(b) connections between mediator &

 U.S. trustee 0.5%–1.1% 0.3%

Other Issues

Sua sponte referrals to mediation 11.6%–23.3% not asked

Referrals over objection of a party 3.3%–6.6% not asked

Mediator fee paid by bankruptcy estate 10.2%–20.3% 19.0%

Mediator role in formulating reorganization plan not asked 9.4%

Note: Rate of occurrence is derived by dividing (1) the number matters in which counsel/mediator respondents observed or perceived the particular problem/issue by (2) the total number of matters for all respondents of that type. Adjustments have been made for non-respondents.

* To account for unknown duplicates, we present a lower and upper bound. See supra note 4.

Although none of the problems occurred with great frequency, some types of

problems appear to occur relatively more frequently than others. Among counsel

responses to the questionnaire, the highest occurrence rates were in the areas of

• breaches of confidentiality,

• mediators who were not “disinterested” (as that term is defined in the Bankruptcy Code),

• confidentiality of the mediation process affecting judicial approval of settlement, and

• perceived connections between mediators and judges.

Among the mediator responses, the highest occurrence rates were in the areas

of

• confidentiality affecting judicial approval of settlement, and

• mediators who were not “disinterested.”
National Survey on Mediation in Bankruptcy

3

Other Issues

Respondents also indicated the frequency with which certain events occurred.

These are identified as “Other Issues” in Table 1. Respondents reported that,

among the matters that were referred to mediation

• bankruptcy judges referred less than 24% of the matters sua sponte,

• less than 7% of the matters were referred over the objection of one or more

parties,

• the bankruptcy estate paid the mediator’s fee in less than 21% of the mediated matters, and

• the mediator played a role in formulating a reorganization plan in approximately 9% of the mediator-identified matters.

Summary of Respondent Comments

The report also includes as Appendix 3 a summary of respondent comments as a

supplement to the quantitative data.

Questions for Committee Consideration

Questions raised by these data include the following:

• Are observed or perceived problems in mediation of little significance because they occur infrequently?

• Are some observed or perceived problems so serious in nature that any occurrence of the problem, even though infrequent, warrants attention?

• Are these matters best addressed by national rules or should they be left to

local rules?

Publication of this report, in addition to serving the committee, will also serve

to inform bankrupcty judges, practitioners, and those interested in ADR.
This page left blank intentionally for proper pagination when printing two-sided
5

Report on the Survey

Purpose of the Survey

The Advisory Committee on Bankruptcy Rules asked the Federal Judicial Center

to undertake this survey to inform the committee’s preliminary look at whether

there is a need for national bankruptcy rules to govern mediation. The purpose of

the survey is to determine the extent and severity of problems that the committee,

lawyers, and mediators believe may affect mediation conducted after judicial referral.

Background

Mediation Programs in Bankruptcy Courts

At least twenty-eight bankruptcy courts (approximately 30% of all bankruptcy

courts) currently have local rules, general orders, or guidelines that govern judicial

referral of bankruptcy matters to mediation. These courts are

Northern District of Alabama District of Massachusetts

District of Alaska Eastern District of Michigan (Southern Division)

Central District of California District of Nebraska

Eastern District of California District of New Jersey

Northern District of California Southern District of New York

Southern District of California Eastern District of North Carolina5

District of Colorado Northern District of Oklahoma

Middle District of Florida District of Oregon

Southern District of Florida Eastern District of Pennsylvania

District of Idaho Middle District of Pennsylvania (Northern Tier)

Northern District of Illinois Western District of Pennsylvania

Northern District of Indiana Northern District of Texas

District of Kansas District of Utah

Eastern District of Louisiana Eastern District of Virginia (Alexandria Division)

The Central District of California has referred the highest number of bankruptcy matters to mediation. The court reports that 1,049 matters, as of February

25, 1998, have been referred since program inception in mid-1995.

The procedures of about twenty mediation programs specifically authorize

judges to refer a matter to mediation sua sponte. The procedures of a few programs specifically require that the parties consent before a matter can be referred

to mediation. None of the twenty-eight courts automatically refers all matters, or

even blocks of certain matter types, to mediation.

In addition to the twenty-eight bankruptcy courts listed above, at least three

bankruptcy courts, the Southern and Western Districts of Texas and the Northern

 

5. The Bankruptcy Administrator’s Pilot Mediation Program was in existence during the survey period. Subsequently, effective Oct. 1, 1997, the court adopted a local rule on mediated settlement conferences.
National Survey on Mediation in Bankruptcy

6

District of Ohio, use district court ADR procedures but without specific mention in

their local bankruptcy rules.

Other bankruptcy courts are considering the adoption of mediation programs.

Currently in some courts that do not have established court procedures for referral to mediation, certain judges make use of “ad hoc” referrals.

Activity by the Federal Judicial Center

In the late 1980s, the Federal Judicial Center reported on its study of the mediation program in the Bankruptcy Court for the Southern District of California. 6

More recently, the Center has assisted other bankruptcy courts, including the

Central District of California, Northern District of California, Southern District of

New York, and the District of Utah, in developing questionnaires to send to persons who participated in mediation. Some of the courts have released certain statistics gathered from questionnaire responses.7

The Center also has attempted to keep abreast of developments in the bankruptcy ADR area and has compiled a draft “sourcebook” of currently operational

ADR programs. The Center plans to publish this sourcebook in a format similar to

ADR and Settlement in the Federal District Courts and Mediation & Conference Programs in the Federal Courts of Appeals.

8

Activity by Other Organizations

Other groups have studied ADR in bankruptcy courts. The ABA’s Joint Ad Hoc

Committee on Bankruptcy Court Structure and Insolvency Processes has debated

the need for national or local rules on ADR in bankruptcy. As part of its effort, in

the spring of 1997, the joint committee sent a set of local rule provisions on mediation to all federal chief district judges, bankruptcy judges, and bankruptcy

clerks.9

 The document was drafted by a working group made up of several members of the Chapter 11 subcommittee of the ABA’s Business Bankruptcy Committee. The provisions, drafted to assist bankruptcy courts that might decide to adopt

court-based mediation programs, include suggested text with commentary.10 Many

of the provisions are patterned after several existing local rules and cover such

 

6. Steven Hartwell & Gordon Bermant, Alternative Dispute Resolution in a Bankruptcy Court:

The Mediation Program in the Southern District of California (Federal Judicial Center 1988).

7. Professor Woodward of Temple University has prepared a report on the bankruptcy mediation program in the Eastern District of Pennsylvania. William J. Woodward, Jr., Report on

Court Sponsored Mediation, U.S. Bankruptcy Court, Eastern District of Pennsylvania, January 6,

1998 (unpublished manuscript, on file with the Research Division, Federal Judicial Center).

8. Elizabeth Plapinger & Donna Stienstra, ADR and Settlement in the Federal District Courts: A

Sourcebook for Judges and Lawyers (Federal Judicial Center 1996); Robert J. Niemic, Mediation &

Conference Programs in the Federal Courts of Appeals: A Sourcebook for Judges and Lawyers

(Federal Judicial Center 1997).

9. Letter from Nathan B. Feinstein, chair of the Joint Ad Hoc Committee on Bankruptcy

Court Structure and Insolvency Processes, to all federal chief district judges, bankruptcy judges,

and bankruptcy clerks (May 27, 1997) (on file with the Research Division, Federal Judicial Center).

10. The term “court-based” generally refers to an ADR program or practice authorized and

used by a court. The term “court-annexed” has the same meaning.
National Survey on Mediation in Bankruptcy

7

topics as establishing a roster of mediators, selecting a mediator for a matter, handling conflicts of interest, and maintaining confidentiality.

The American Bankruptcy Institute also has become involved in the local rule

discussion. The ABI’s ADR subcommittee recognized that mediation is used increasingly, even in bankruptcy courts that have not established comprehensive

court-based mediation programs. The ABI issued its Model Local Rule,11 which is a

set of suggested provisions to govern judicial referral to mediation in these bankruptcy courts. In addition, the ABI has released its Mediation Manual: A Guide for

Implementing Dispute Resolution Procedures in Bankruptcy Matters.

12 The manual

was developed principally for use by attorneys and judges in bankruptcy courts

that do not have court-based programs.

The National Bankruptcy Review Commission also considered the need for

statutory changes and rules on mediation. Panelists discussed these and related

issues at the commission’s regional meeting in New York in May 1997 and the full

commission discussed mediation at its June 1997 meeting. At its August 1997

meeting, the commission unanimously voted to recommend that Congress

authorize bankruptcy courts to “enact local rules establishing mediation programs

in which the court may order non-binding, confidential mediation upon its own

motion or upon the motion of any party in interest.” Such a statute, the commission recommended, should include explicit authority to approve the payment of

mediators pursuant to local rules. However, the recommendation states that bankruptcy courts should not “order mediation of a dispute arising in connection with

the retention or payment of professionals or in connection with a motion for

contempt, sanctions, or other judicial disciplinary matter.” The commission’s recommendations are contained in its final report to Congress dated October 20,

1997.13

In adopting the recommendation, the commission noted that some may question whether specific statutory authority is necessary given that many districts already have established mediation programs. In recent years, commentators have

written extensively about inherent power and other authority that allow bankruptcy courts to establish mediation programs.14

Committee’s Request for a Survey

The Alternative Dispute Resolution Subcommittee of the Advisory Committee on

Bankruptcy Rules has been monitoring ADR-related activity in the bankruptcy

courts for several years. The subcommittee presented a report regarding ADR at the

September 1995 meeting of the full committee. The report recommended that the

 

11. Model Local Rule, ADR Subcommittee of the American Bankruptcy Institute (May 17,

1997) (on file with the Research Division, Federal Judicial Center).

12. Jacob Aaron Esher, Mediation Manual: A Guide for Implementing Dispute Resolution

Procedures in Bankruptcy Matters (1996) (on file with the Research Division, Federal Judicial

Center).

13. Bankruptcy: The Next Twenty Years, National Bankruptcy Review Commission Final Report, October 20, 1997, at 489–92.

14. Id. at 492.
National Survey on Mediation in Bankruptcy

8

committee not propose any ADR-related rule changes at that time but that the subcommittee continue to monitor activity relating to ADR in the bankruptcy courts.

Before reaching this recommendation, the subcommittee considered specific suggestions for rules changes related to ADR. A preliminary draft of these changes, for

discussion purposes only, had been distributed to the full committee at its March

1995 meeting.

At its February 1997 meeting, the subcommittee discussed whether it should

(1) move forward on drafting a national rule on mediation, (2) propose a supplemental national rule addressing “problem” areas such as ex parte contacts and

confidentiality, or (3) disband. The subcommittee decided not to disband but to

ask the Federal Judicial Center to collect empirical information to guide the subcommittee’s actions. It recommended a survey of practitioners in bankruptcy

courts that regularly refer matters to mediation to determine the nature and severity of problems that might exist.

The subcommittee identified the following areas where mediation participants

might have observed or perceived problems in the mediation process: ex parte

contacts, confidentiality, disinterestedness, disclosure of potential and actual conflicts of interest, and payments to neutrals. One member also identified potential

problems with mediation in plan formulation vis-à-vis the role of an examiner. He

expressed concern about the lack of constraints over mediators/neutrals in the

bankruptcy code and rules, whereas there are constraints governing examiners.

Some subcommittee members also questioned whether court-ordered mediation

works if the parties do not consent to mediation and whether bankruptcy judges

should be allowed or encouraged to order parties to mediation if one or more of

the parties do not consent (mandatory referral to mediation).

Another issue raised was judicial review of settlement terms after mediation.

Although generally not required in settlement of ordinary civil actions, such review usually is required in bankruptcy because settlement of a particular matter

might drain assets from the estate or diminish prospects for reorganization, thus

affecting all creditors in the bankruptcy case. Given this, there could be facts or

issues disclosed in the mediation of a matter that the bankruptcy judge might need

to know in deciding whether to approve settlement. The subcommittee recommended that the survey questionnaire ask practitioners if the mediation process’s

confidentiality requirements prevented the bankruptcy judge from learning such

facts or issues.

On the recommendation of the ADR subcommittee, the full committee at its

March 1997 meeting asked the Federal Judicial Center to collect empirical information on mediation practices. The committee did not take a position on the use

of mediation in bankruptcy cases. The Center delivered a preliminary report on

the survey at the full committee’s meeting in September 1997 and a final report on

the survey at the full committee’s meeting in March 1998. The subcommittee

plans to review the results contained in this report and then decide whether to

make recommendations to the full committee.
National Survey on Mediation in Bankruptcy

9

Survey Design

The Questionnaire

Federal Judicial Center staff developed a questionnaire to determine the extent

and severity of problems regarding mediation conducted after judicial referral.

Appendix 1 shows the questionnaire. It consists predominately of questions relating to issues identified by the committee to assist the committee in determining

whether to consider rule changes regarding conflicts of interest, ex parte contacts,

confidentiality, and payments to neutrals by the bankruptcy estate.

On July 10, 1997, we mailed the questionnaire to a sample of counsel and mediators who participated in the mediation of one or more bankruptcy matters after judicial referral pursuant to programs or procedures of a bankruptcy court

during the three-year period before May 1997. See Appendix 2 for a description of

the sample and methods. For this first mailing, the due date for questionnaire responses was July 31, 1997. Because of mailing list problems, there were subsequent

mailings of about 150 additional questionnaires and they had due dates in the late

summer of 1997.

As of November 15, 1997, the Center received 1,272 responses to the 1,992

questionnaires sent, a 63.9% response rate. Table 2 shows the number of people

who were sent the questionnaire and the number who responded. The response

rate by district is shown in Table 3.

Table 2

Recipients of and Respondents to the Questionnaire

(unweighted data)

Number of Number of

Recipients Responses* Response Rate

Counsel representing parties in mediation 1,539 918 59.6%

Mediators 361 282 78.1%

Both counsel and mediators (mediators

who also, as counsel, represented parties

in mediation(s) of other matters) 92 72 78.3%

Total 1,992 1,272 63.9%

We asked about each respondent’s participation in mediation as counsel representing a party (Questions 1–16), about participation in mediation as a mediator (Questions 17–31), and about the respondent’s practice areas (Questions 32

and 33). See Appendix 1. For most questions, we asked for a no, yes, or “can’t say”

response and for further explanation of any yes response. A summary of these explanations and general comments is included in Appendix 3.
National Survey on Mediation in Bankruptcy

10

Table 3

Recipients of and Respondents to the Questionnaire—By District

(unweighted data)

Number of Number of

Bankruptcy Court Recipients Responses* Response Rate

Alabama Northern 8** 6 75.0%

California Central 468*** 280 59.8%

California Eastern 105 72 68.6%

California Northern 207 144 69.6%

California Southern 193 109 56.5%

Florida Middle 55 33 60.0%

Florida Southern 31 21 67.7%

Indiana Northern 9 6 66.7%

Kansas 4 2 50.0%

Nebraska 4 3 75.0%

New Jersey 26 21 80.8%

New York Southern 290 183 63.1%

Oregon 98 63 64.3%

Pennsylvania Eastern 369 232 62.9%

Texas Southern 20 17 85.0%

Texas Western 14 13 92.9%

Utah 11 9 81.8%

Virginia Eastern (Alexandria Division) 80 58 72.5%

Total 1,992 1,272 63.9%

* These unweighted counts include 231 respondents who indicated that they were neither counsel nor mediator in a mediated bankruptcy matter.

** The list provided by the court includes only counsel who represented parties in matters referred to mediation. The

court could not provide a list of mediators who participated in matters referred to mediation.

*** Fifty percent random sample. See Appendix 2, Methods.

Possible Second Phase of the Survey

The need for a second phase of the survey may be considered by the committee. In

the second phase, which would be based on the results of the first phase, the Center could survey all bankruptcy judges, all bankruptcy clerks, major bankruptcyrelated organizations, and a nationwide sample of bankruptcy practitioners to address any notable areas of concern identified in this study report. The Center

could also conduct follow-up interviews with certain respondents to the first

questionnaire who identified major problems in the mediation process and who

gave the Center permission for such follow-up. See Appendix 4, Possible Second

Phase of Survey.

Survey Results: Respondents to the Questionnaire

Respondents’ Roles in Mediation of Bankruptcy Matters

During the thirty-six months before responding to the questionnaire, 1,04315 of

the respondents to this survey had participated as counsel for a party in the mediation of one or more matters referred to mediation by a bankruptcy judge.

 

15. Weighted data will be used hereinafter in the body of this report unless otherwise stated.

See Appendix 2, Methods for a description of sampling and weighting.
National Survey on Mediation in Bankruptcy

11

During the same period, 440 respondents had participated as a mediator in one or

more matters referred to mediation by a bankruptcy judge. Both of these figures

include 194 respondents who participated both as counsel representing a party

and as a mediator in a separate matter or matters. Table 4 shows the number of

respondents (1,289 in total) who were counsel only, mediator only, and both

counsel and mediator.16

Table 4

Respondents by Type: Counsel Only, Mediator Only, or Both

(weighted data)

Number of Percentage of

Respondents Respondents

Counsel only 849 65.9%

Mediator only 246 19.1%

Both counsel and mediator (mediators

who also represented, as counsel, parties

in mediation(s) of other matters) 194 15.0%

Total 1,289* 100.0%

* In addition to the counts shown above, 260 respondents indicated that they were neither counsel nor mediator in a

mediated bankruptcy matter, and nine stated that they appeared as a pro se party. Also, nine recipients returned their questionnaires blank and the U.S. Postal Service returned another 58 questionnaires as undeliverable. See Appendix 2, Methods.

The referrals to mediation were sua sponte, at the request of a party, or by

joint motion. Thirty-four percent of counsel-respondents indicated that a bankruptcy judge referred at least one of their matters to mediation without a request

from a party.

Ninety-nine percent of the respondents who said they participated either as

counsel, mediator, or both indicated the number of matters in which they had

participated. Of those who indicated the number of matters, most (591 respondents or 46.1% of such respondents) participated in the mediation of only one

matter. About 30% (386 respondents) participated in two or three. Another 19.6%

(252 respondents) had mediation experience in four to eight matters. And 4.2%

(54 respondents) participated in nine or more mediations. Of these, sixteen

(1.2%) participated in fifteen or more mediations. The range was one to seventyseven matters. 17

Separating out counsel and mediator responses, the median was one mediation participation for counsel-respondents and three participations for mediatorrespondents. The range was one to seventy-one matters for counsel-respondents

and one to thirty-nine for mediator-respondents.

 

16. Throughout this report, we will refer to respondents who represented parties in these mediations as “counsel” and respondents who were mediators in one or more of these matters as

“mediators.”

17. One respondent identified a large number of mediated matters where the respondent appeared as counsel and a large number of matters in which the respondent participated as the mediator, for a total of seventy-seven matters. This respondent, who did not give us permission to

contact the respondent, reported problems in many of these matters and at a rate proportionately

higher than other respondents. The effect of this respondent’s responses; however, does not have a

significant effect on the survey results.
National Survey on Mediation in Bankruptcy

12

Counsel-respondents reported participating in the mediation of 2,108 matters.

More than one counsel may be reporting on the same matter, so this count may

overstate the number of matters mediated by the attorneys in our sample. We

could not design the survey to avoid this duplication, given that we did not want

to have cases or matters identified such that respondents would be reluctant to

respond candidly or such that respondents might breach confidentiality. We assume that the worst case scenario for duplication is that 50% of the counselidentified matters are duplicates. Thus, the number of matters participated in by

counsel-respondents is somewhere between 1,054 (50% of 2,108) and 2,108 matters. This is an average of 1.0 to 2.0 matters per counsel.18

Mediator-respondents reported mediating 1,480 matters. This is an average of

3.4 matters per mediator (1,480 matters/429 mediators who indicated the number

of matters).19 Most likely, many of these mediator-identified matters were matters

also identified by counsel-respondents.20

Respondents’ Practice Areas

Table 5 shows the practice area concentrations of respondents. About 64% of the

1,289 respondents who were counsel, mediator, or both were practitioners who

said they spent 20% or more of their time representing creditors or debtors in

business bankruptcy cases. About 38% (490 of the 1,289 respondents) represented

creditors or debtors in consumer bankruptcy cases at least 20% of the time. Approximately 20% of the 1,289 respondents had a 20% or more concentration as

counsel for a Chapter 7 or Chapter 11 trustee. Only 3.8% spent 20% or more of

their time as a bankruptcy trustee, but a slightly larger percent (5.3%) devoted at

least that much of their practice to serving as a mediator.

 

18. These averages were calculated by dividing the lower bound estimate of 1,054 matters by

the 1,038 counsel who identified the number of matters and by dividing the upper bound estimate

of 2,108 matters by 1,038 counsel. Five of the 1,043 counsel-respondents did not give the number

of matters in which they participated.

19. Eleven mediator-respondents did not give the number of matters in which they participated.

20. There should be little double counting of mediator matters within the mediator matter

count itself, assuming that a substitute mediator infrequently mediated after substantial participation by the originally appointed mediator and that instances of co-mediation were rare.
National Survey on Mediation in Bankruptcy

13

Table 5

Practice Areas Constituting 20% or More of Respondents’ Practice

(Respondents Who Were Counsel, Mediator, or Both) (N = 1,289) (weighted data)

Number of Percentage of

Practice Area Respondents Respondents*

Business Cases 821 63.7%

Representing creditors in business bankruptcy cases 631 49.0%

Representing debtors in business bankruptcy cases 574 44.5%

Consumer Cases 490 38.0%

Representing creditors in consumer bankruptcy cases 216 16.8%

Representing debtors in consumer bankruptcy cases 364 28.2%

Serving as Counsel for Bankruptcy Trustees 251 19.5%

Chapter 7 165 12.8%

Chapter 9 0 0.0%

Chapter 11 124 9.6%

Chapter 12 0 0.0%

Chapter 13 0 0.0%

Serving as a Bankruptcy Trustee 49 3.8%

Chapter 7 30 2.3%

Chapter 9 0 0.0%

Chapter 11 23 1.8%

Chapter 12 0 0.0%

Chapter 13 1 0.1%

Serving as a Mediator 68 5.3%

Other 300** 23.3%

Litigation (general) 136 10.6%

Business/transactional (general) 49 3.8%

Bankruptcy/workouts (general) 25 1.9%

Creditor representation (general) 19 1.5%

Family law 8 0.6%

U.S. trustee 5 0.4%

Arbitrator 5 0.4%

Professional liability representation 5 0.4%

Debtor representation (general) 4 0.3%

Examiner/consultant 4 0.3%

Accountant/financial expert 3 0.2%

Law professor 2 0.2%

*Percentages add to more than 100% because many respondents identified more than one practice area.

**Not all respondents identified what their “other” practice areas were.

Years in Practice

About 64% of the 1,289 respondents21 had practiced bankruptcy law for five to

twenty years. See Table 6. The range of bankruptcy experience was from zero to

 

21. Twenty of the 1,289 respondents did not include a number of years in response to Question 33. That question asked how long each respondent had practiced in bankruptcy practice areas.
National Survey on Mediation in Bankruptcy

14

fifty-seven years, with a median of twelve years for counsel-respondents and sixteen years for mediator-respondents.

Table 6

Number of Years Working in Bankruptcy Practice Areas

(Respondents Who Were Counsel, Mediator, or Both) (N = 1,289) (weighted data)

Number of Percentage of

Number of Years Respondents Respondents

None 53 4.1%

1 to 5 187 14.5%

Between 5 and 10 292 22.7%

10 to 20 539 41.8%

More than 20 198 15.4%

No response 20 1.6%

Total 1,289 100%*

* Total may not add to 100% due to rounding.

Survey Results: “Problems” Identified by Respondents

This section discusses the incidence of problems with the mediation process as

observed or perceived by mediation participants who responded to the questionnaire.22 The discussion and tables below describe the extent of those problems as

identified by counsel and mediators separately. For each problem area asked about

in the questionnaire, respondents reported that the problem occurred in 2.5% or

less of the matters referred to mediation.

As discussed above, more than one counsel may be reporting on the same

matter or problem. In the data presented below, we assume that the worst case

scenario for duplication is that 50% of the counsel-identified matters are duplicates.23 Thus, we will present a lower bound (which is 50% of the number of matters reported by counsel-respondents) and an upper bound (which is the total

number of matters reported by counsel-respondents).

For each problem identified by a respondent, the questionnaire asked the respondent to explain the circumstances and how the situation was handled (see

Appendix 3). These qualitative comments are rich with information that may enable the committee to further interpret the severity of the problems identified.

 

22. Thirteen respondents stated in their written comments that at least one of the matters they

identified on the questionnaire did not include a mediation session. This occurred, for example,

because the case settled before the mediation session was held, the referral to mediation was recent

and the mediation session was not yet scheduled, or the opposing party did not want a mediation

session held. It is not known whether other respondents had similar situations in some of the

matters they identified. The effect of the circumstances involving the thirteen, and any additional,

respondents is that the rates of occurrence of problems may be slightly understated in the results

reported in this report.

23. See supra note 4.
National Survey on Mediation in Bankruptcy

15

Mediator Disclosure of Confidential Information

Question 3 (for counsel-respondents): During or after the mediation, did the mediator

disclose without permission any statements made or materials used in the mediation?

As described above, 1,043 respondents identified themselves as counsel representing parties. Question 3 asked these respondents to identify the number of

matters in which the mediator disclosed without permission any statement made

or materials used in mediation. Local rules in all but one of the eighteen courts in

the survey specifically impose a confidentiality requirement that generally provides that all written or oral communications that occur during or in connection

with the mediation process are confidential. Confidentiality requirements or

agreements of this nature are fairly standard in mediation. Twenty-five counselrespondents (2.4%) identified24 between nineteen and thirty-eight matters where

unauthorized disclosure occurred (accounting for duplicates). (Tables 7A and 7B.)

These matters represent 0.9%–1.8% of all mediated matters handled by counsel

who fully responded to Questions 2 and 3; that is a reported occurrence rate of

0.9%–1.8%.25 Looking at the breakdown of the thirty-eight matters at the upper

bound, twenty-two counsel-respondents identified one matter, two identified

three, and one identified ten matters.

Question 19 (for mediator-respondents): Did any of the parties to the mediation

assert that during or after the mediation you disclosed without permission any

statements made or materials used in the mediation?

In similar fashion to Question 3, Question 19 asked the 440 mediatorrespondents to identify matters where they were the mediator and where a party

to the mediation asserted that the mediator disclosed without permission statements made or materials used in the mediation. Only two mediator-respondents

(0.5%) identified any such matters and those respondents said it occurred in a total of six matters. This represents 0.4% of all matters mediated by mediators who

fully responded to Questions 18 and 19.26 (Tables 7A and 7B.)

 

24. “Identified” as used in this context does not mean that the respondents identified the

matter name, case number, parties, or any case-identifiable information. Respondents simply

wrote down the number of such matters in which they were involved.

25. Throughout this report, rate of occurrence for counsel-respondents is calculated by dividing (1) the number of matters in which counsel-respondents observed or perceived the particular

problem/issue by (2) the number of matters in which all counsel-respondents participated, adjusting for respondents who did not fully answer relevant questions.

26. Throughout this report, rate of occurrence for mediator-respondents is calculated by dividing (1) the number of matters in which mediator-respondents observed or perceived the particular problem/issue by (2) the number of matters in which all mediator-respondents participated, adjusting for respondents who did not fully answer relevant questions.
National Survey on Mediation in Bankruptcy

16

Table 7A

Mediator Disclosure of Confidential Information

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Percentage of Number of Percentage of

Counsel-Respondents Counsel-Respondents Mediator-Respondents Mediator-Respondents

Yes 25 2.4% 2 0.5%

No 869 83.7% 423 97.7%

Can’t say 144 13.9% 8 1.8%

Total 1,038* 100.0% 433** 100.0%***

Note: Data in Table 7A derived from responses to survey Questions 3 and 19.

Question 3 (for counsel-respondents): During or after the mediation, did the mediator disclose without permission any

statements made or materials used in the mediation?

Question 19 (for mediator-respondents): Did any of the parties to the mediation assert that during or after the mediation you disclosed without permission any statements made or materials used in the mediation?

*Five counsel-respondents did not answer Question 3.

**Seven mediator-respondents did not answer Question 19.

***Total may not add to 100% due to rounding.

Table 7B

Number and Rate of Matters with Mediator Disclosure Problem

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Matters Rate of Occurrence Number of Matters Rate of Occurrence in

with Mediator in Counsel-Respondent with Assertion of Mediator-Respondent 

Disclosure Matters* Mediator Disclosure Matters**

19–38 0.9%–1.8% 6 0.4%

Note: Data in Table 7B derived from responses to survey Questions 3 and 19.

Question 3 (for counsel-respondents): During or after the mediation, did the mediator disclose without permission any

statements made or materials used in the mediation?

Question 19 (for mediator-respondents): Did any of the parties to the mediation assert that during or after the mediation you disclosed without permission any statements made or materials used in the mediation?

* The denominator in this calculation is the total number of mediated matters handled by counsel who fully answered

Questions 2 and 3.

** The denominator in this calculation is the total number of matters mediated by mediators who fully answered Questions 18 and 19.

Party Disclosure of Confidential Information

Question 4 (for counsel-respondents) and Question 20 (for mediator-respondents):

During or after the mediation, did any of the parties to the mediation or their counsel

disclose without permission any statements made or materials used in the mediation?

Forty-two of the counsel-respondents (4.0%) identified between twenty-six

and fifty-two matters where during or after the mediation one or more of the parties to the mediation or their counsel disclosed without permission statements

made or materials used in the mediation. (Tables 8A and 8B.) These matters represent 1.2%–2.4% of all matters handled by counsel who fully responded to Questions 2 and 4. Looking at the fifty-two matters (the upper bound), thirty-seven

counsel-respondents identified one such matter, two respondents identified two,

one respondent identified three, and two respondents identified four.

Nearly 28% of the mediator-respondents answered “can’t say” when asked the

same question; however seven mediator-respondents (1.6%) identified nine mat-
National Survey on Mediation in Bankruptcy

17

ters where disclosure occurred. (Tables 8A and 8B.) Six respondents identified one

matter and one respondent identified three matters. The nine matters represent

0.6% of all matters mediated by mediators who fully answered Questions 18 and

20.

Table 8A

Party Disclosure of Confidential Information

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Percentage of Number of Percentage of

Counsel-Respondents Counsel-Respondents Mediator-Respondents Mediator-Respondents

Yes 42 4.0% 7 1.6%

No 827 79.7% 305 70.6%

Can’t say 169 16.3% 120 27.8%

Total 1,038* 100.0% 432** 100.0%

Note: Data in Table 8A derived from responses to survey Questions 4 and 20.

Question 4 (for counsel-respondents): During or after the mediation, did any of the parties to the mediation or their

counsel disclose without permission any statements made or materials used in the mediation?

Question 20 (for mediator-respondents): During or after the mediation, did any of the parties to the mediation or their

counsel disclose without permission any statements made or materials used in the mediation?

*Five counsel-respondents did not answer Question 4.

**Eight mediator-respondents did not answer Question 20.

Table 8B

Number and Rate of Matters with Party Disclosure Problem

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Matters Rate of Occurrence Number of Matters Rate of Occurrence

with Party in Counsel-Respondent with Party in Mediator-Respondent

Disclosure Matters* Disclosure Matters**

26–52 1.2%–2.4% 9 0.6%

Note: Data in Table 8B derived from responses to survey Questions 4 and 20.

Question 4 (for counsel-respondents): During or after the mediation, did any of the parties to the mediation or their

counsel disclose without permission any statements made or materials used in the mediation?

Question 20 (for mediator-respondents): During or after the mediation, did any of the parties to the mediation or their

counsel disclose without permission any statements made or materials used in the mediation?

* The denominator in this calculation is the total number of mediated matters handled by counsel who fully answered

Questions 2 and 4.

** The denominator in this calculation is the total number of matters mediated by mediators who fully answered Questions 18 and 20.

Confidentiality Requirements and Judicial Approval of Settlement

Question 5 (for counsel-respondents) and Question 21 (for mediator-respondents):

Did the confidentiality requirements of the mediation process prevent the bankruptcy

judge from learning facts or issues that the judge would have needed to know in

deciding whether to approve a settlement of the matter that was mediated?

Another issue covered in the questionnaire concerns judicial review of the

terms of a settlement reached after mediation. Although such review is generally

not required in mediated settlement of ordinary civil actions, it usually is required

in bankruptcy because settlement in a particular matter might drain assets from

the estate or diminish prospects for reorganization, thus affecting all creditors in
National Survey on Mediation in Bankruptcy

18

the bankruptcy case. Given this, there could be facts or issues disclosed in a mediation that the bankruptcy judge might need to know in deciding whether to approve a settlement.

Thirty-one counsel-respondents (3.0%) indicated that confidentiality requirements prevented the bankruptcy judge from learning facts or issues that the

judge would have needed to know in deciding whether to approve a settlement of

the matter. Twenty-six of the thirty-one counsel-respondents indicated how often

the problem occurred. Accounting for duplicates, the number of matters with this

problem was reported to be between eighteen and thirty-six. (Tables 9A and 9B.)

These matters represent 0.8%–1.7% of all matters handled by counsel who fully

answered Questions 2 and 5.27 Looking at the breakdown of the thirty-six matters

at the upper bound, twenty-one counsel-respondents indicated that there was one

such matter, four said it happened in two matters, and one respondent saw it in

seven matters.

Twenty mediator-respondents (4.6%) indicated that confidentiality affected

settlement approval. Twenty-six percent answered “can’t say.” Sixteen of the

twenty indicated how often the problem occurred. (Tables 9A and 9B.) Eleven

respondents identified one such matter, and one respondent each identified two,

three, five, six, and seven such matters, for a total of thirty-four matters. These

thirty-four matters represent 2.3% of all matters mediated by mediators who fully

responded to Questions 18 and 21.28

Table 9A

Confidentiality Affecting Judicial Approval of Settlement

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Percentage of Number of Percentage of

Counsel-Respondents Counsel-Respondents Mediator-Respondents Mediator-Respondents

Yes 31 3.0% 20 4.6%

No 793 76.8% 299 69.1%

Can’t say 209 20.2% 114 26.3%

Total 1,033* 100.0% 433** 100.0%

Note: Data in Table 9A derived from responses to survey Questions 5 and 21.

Question 5 (for counsel-respondents): Did the confidentiality requirements of the mediation process prevent the bankruptcy judge from learning facts or issues that the judge would have needed to know in deciding whether to approve a settlement of the matter that was mediated?

Question 21 (for mediator-respondents): Did the confidentiality requirements of the mediation process prevent the

bankruptcy judge from learning facts or issues that the judge would have needed to know in deciding whether to approve a

settlement of the matter that was mediated?

* Ten counsel-respondents did not answer Question 5.

**Seven mediator-respondents did not answer Question 21.

 

27. The actual occurrence rate may be slightly greater or less because five of the thirty-one

counsel-respondents did not fill in the number of matters in which the problem occurred. These

five were counsel in a total of fifteen matters.

28. The actual occurrence rate may be slightly greater or less than 2.3% because four of the

twenty mediator-respondents did not fill in the number of matters in which the problem occurred.

These four mediated a total of twelve matters.
National Survey on Mediation in Bankruptcy

19

Table 9B

Number and Rate of Matters with Confidentiality Affecting Judicial Approval of

Settlement

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Matters Reported Rate of Number of Matters Reported Rate of

with Confidentiality Occurrence in with Confidentiality Occurrence in

Affecting Judicial Counsel-Respondent Affecting Judicial Mediator-Respondent

Approval Matters* Approval Matters**

18–36+ 0.8%–1.7% 34+ 2.3%

Note: Data in Table 9B derived from responses to survey Questions 5 and 21.

Question 5 (for counsel-respondents): Did the confidentiality requirements of the mediation process prevent the bankruptcy judge from learning facts or issues that the judge would have needed to know in deciding whether to approve a settlement of the matter that was mediated?

Question 21 (for mediator-respondents): Did the confidentiality requirements of the mediation process prevent the

bankruptcy judge from learning facts or issues that the judge would have needed to know in deciding whether to approve a

settlement of the matter that was mediated?

* The denominator in this calculation is the total number of mediated matters handled by counsel who fully answered

Questions 2 and 5.

** The denominator in this calculation is the total number of matters mediated by mediators who fully answered Questions 18 and 21.

+ Five of the 31 counsel-respondents identified in Table 9A answered yes to Question 5 but did not identify the number

of matters in which the problem occurred. Four of the 20 mediator-respondents identified in Table 9A answered yes to

Question 21 but did not identify the number of matters in which the problem occurred.

Ex Parte Contacts Between Mediator and Judge

Question 6 (for counsel-respondents): Were there ex parte contacts between the

mediator and the judge that were not authorized by the parties?

Fifteen counsel-respondents (1.4%) identified between eight and seventeen

matters where there were unauthorized ex parte contacts between the mediator

and the judge. This is an occurrence rate of 0.4%–0.8%. (Tables 10A and 10B.)

Looking at the seventeen matters at the upper bound, fourteen counselrespondents identified one matter and one identified three. Nearly 31% of counsel-respondents answered “can’t say.”

Question 22 (for mediator-respondents): Were there ex parte contacts between you

and the judge that were not authorized by the parties?

Three mediator-respondents (0.7%) identified five matters (an occurrence rate

of 0.3%) in which there were unauthorized ex parte contacts between the mediator and judge. One respondent said it occurred in one matter and two reported

occurrence in two matters. (Tables 10A and 10B.)
National Survey on Mediation in Bankruptcy

20

Table 10A

Ex Parte Contacts Between Mediator and Judge

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Percentage of Number of Percentage of

Counsel-Respondents Counsel-Respondents Mediator-Respondents Mediator-Respondents

Yes 15 1.4% 3 0.7%

No 701 67.7% 430 99.3%

Can’t say 319 30.8% 0 0.0%

Total 1,035* 100.0%*** 433** 100.0%

Note: Data in Table 10A derived from responses to survey Questions 6 and 22.

Question 6 (for counsel-respondents): Were there ex parte contacts between the mediator and the judge that were not

authorized by the parties?

Question 22 (for mediator-respondents): Were there ex parte contacts between you and the judge that were not authorized by the parties?

*Eight counsel-respondents did not answer Question 6.

**Seven mediator-respondents did not answer Question 22.

*** Totals may not add to 100% due to rounding.

Table 10B

Number and Rate of Matters with Ex Parte Contacts Between Mediator and

Judge

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Matters Rate of Occurrence Number of Matters Rate of Occurrence

with Ex Parte in Counsel- with Ex Parte in MediatorContacts Between Respondent Contacts Between Respondent

Mediator and Judge Matters* Mediator and Judge Matters**

8–17 0.4%–0.8% 5 0.3%

Note: Data in Table 10B derived from responses to survey Questions 6 and 22.

Question 6 (for counsel-respondents): Were there ex parte contacts between the mediator and the judge that were not

authorized by the parties?

Question 22 (for mediator-respondents): Were there ex parte contacts between you and the judge that were not authorized by the parties?

* The denominator in this calculation is the total number of mediated matters handled by counsel who fully answered

Questions 2 and 6.

** The denominator in this calculation is the total number of matters mediated by mediators who fully answered Questions 18 and 22.

Mediators’ Failure to Timely Disclose Conflict of Interest

Question 7 (for counsel-respondents): Did the mediator fail to timely disclose a

conflict of interest that the mediator had?

Fourteen counsel-respondents (1.4%) reported that the mediator failed to

timely disclose a conflict of interest. Twelve of the fourteen indicated the frequency of the problem. Accounting for duplicates, the number of matters with

this problem was reported to be between ten and twenty, an occurrence rate of

0.5%–1.0%. (Tables 11A and 11B.) Looking at the twenty matters at the upper
National Survey on Mediation in Bankruptcy

21

bound, seven counsel-respondents identified one matter, four identified two, and

one identified five.29

Question 23 (for mediator-respondents): Did any of the parties to the mediation

assert that you failed to timely disclose a conflict of interest that you allegedly had?

One mediator-respondent (0.2%) identified two matters (an occurrence rate

of 0.14%) in which a party to the mediation asserted that the mediator failed to

timely disclose a conflict of interest. (Tables 11A and 11B.)

Table 11A

Mediators’ Failure to Timely Disclose Conflict of Interest

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Percentage of Number of Percentage of

Counsel-Respondents Counsel-Respondents Mediator-Respondents Mediator-Respondents

Yes 14 1.4% 1 0.2%

No 901 87.1% 430 99.3%

Can’t say 119 11.5% 2 0.5%

Total 1,034* 100.0% 433** 100.0%

Note: Data in Table 11A derived from responses to survey Questions 7 and 23.

Question 7 (for counsel-respondents): Did the mediator fail to timely disclose a conflict of interest that the mediator

had?

Question 23 (for mediator-respondents): Did any of the parties to the mediation assert that you failed to timely disclose

a conflict of interest that you allegedly had?

*Nine counsel-respondents did not answer Question 7.

**Seven mediator-respondents did not answer Question 23.

Table 11B

Number and Rate of Matters with Mediators’ Failure to Timely Disclose Conflict

of Interest

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Matters Rate of Occurrence Number of Matters Rate of

with Mediators’ in Counsel- with Assertion of Occurrence in

Failure to Disclose Respondent Mediators’ Failure to Mediator-Respondent

Conflict of Interest Matters* Disclose Conflict of Interest Matters**

10–20+ 0.5%–1.0% 2 0.1%

Note: Data in Table 11B derived from responses to survey Questions 7 and 23.

Question 7 (for counsel-respondents): Did the mediator fail to timely disclose a conflict of interest that the mediator

had?

Question 23 (for mediator-respondents): Did any of the parties to the mediation assert that you failed to timely disclose

a conflict of interest that you allegedly had?

* The denominator in this calculation is the total number of matters handled by counsel who fully answered Questions 2

and 7.

** The denominator in this calculation is the total number of matters mediated by mediators who fully answered Questions 18 and 23.

+ Two of the 14 counsel-respondents in Table 11A answered yes to Question 7 but did not identify the number of matters in which the problem occurred.

 

29. The actual occurrence rate may be slightly greater or less because two of the fourteen

counsel-respondents did not identify the number of matters in which the problem occurred. These

two were counsel in a total of four matters.
National Survey on Mediation in Bankruptcy

22

Mediator Bias or Prejudice

Question 8 (for counsel-respondents): Should the mediator have been disqualified for

bias or prejudice?

Thirteen counsel-respondents (1.3%) identified between eight and fifteen

matters in which the mediator should have been disqualified for bias or prejudice,

an occurrence rate of 0.4%–0.7%. (Tables 12A and 12B.) Looking at the fifteen

matters at the upper bound, eleven counsel-respondents identified one matter and

two identified two.

Question 24 (for mediator-respondents): Did any of the parties to the mediation

assert that you should have been disqualified for bias or prejudice?

Question 24 asked mediator-respondents if any of the parties to the mediation

asserted that the mediator should have been disqualified for bias or prejudice.

Two mediator-respondents (0.5%) identified one such matter each (an occurrence

rate of 0.14%). (Tables 12A and 12B.)

Table 12A

Mediator Bias or Prejudice Problem

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Percentage of Number of Percentage of

Counsel-Respondents Counsel-Respondents Mediator-Respondents Mediator-Respondents

Yes 13 1.3% 2 0.5%

No 975 94.1% 428 98.8%

Can’t say 48 4.6% 3 0.7%

Total 1,036* 100.0% 433** 100.0%

Note: Data in Table 12A derived from responses to survey Questions 8 and 24.

Question 8 (for counsel-respondents): Should the mediator have been disqualified for bias or prejudice?

Question 24 (for mediator-respondents): Did any of the parties to the mediation assert that you should have been disqualified for bias or prejudice?

* Seven counsel-respondents did not answer Question 8.

**Seven mediator-respondents did not answer Question 24.

Table 12B

Number and Rate of Matters with Mediator Bias or Prejudice Problem

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Rate of Occurrence Number of Matters Rate of Occurrence

Matters with in Counsel- with Assertion of in MediatorMediator Bias or Respondent Mediator Bias Respondent

Prejudice Problem Matters* or Prejudice Matters**

8–15 0.4%–0.7% 2 0.1%

Note: Data in Table 12B derived from responses to survey Questions 8 and 24.

Question 8 (for counsel-respondents): Should the mediator have been disqualified for bias or prejudice?

Question 24 (for mediator-respondents): Did any of the parties to the mediation assert that you should have been disqualified for bias or prejudice?

* The denominator in this calculation is the total number of matters handled by counsel who fully answered Questions 2

and 8.

** The denominator in this calculation is the total number of matters mediated by mediators who fully answered Questions 18 and 24.
National Survey on Mediation in Bankruptcy

23

Mediator Not a “Disinterested Person”

Question 9 (for counsel-respondents):

a. Are you familiar with the term disinterested person as defined in 11 U.S.C.

§ 101(14)?

b. Would the mediator have failed to qualify as a disinterested person if that standard

had applied to the appointment of the mediator?

Forty-one counsel-respondents (4.5%) were familiar with the term

“disinterested person”30 and indicated that the mediator would have failed to

qualify as a disinterested person if that standard had applied to the appointment

of the mediator. Thirty-eight of the forty-one counsel-respondents identified between twenty-four and forty-eight matters in which the mediator would have

failed to qualify, an occurrence rate of 1.2%–2.5%. (Tables 13A and 13B.) Looking

at the forty-eight matters at the upper bound, thirty-two counsel-respondents

identified one matter, two identified two, and four identified three.31

One-hundred-eighteen counsel-respondents (11.4% of those responding to

Question 9a) indicated that they were unfamiliar with the term “disinterested

person.”

 

30. Disinterested person is a term used in connection with the employment by bankruptcy estates of professionals and trustees in bankruptcy cases. The term is defined in the Bankruptcy Code

as follows:

“[D]isinterested person” means person that—

 (A) is not a creditor, an equity security holder, or an insider;

 (B) is not and was not an investment banker for any outstanding security of the debtor;

 (C) has not been, within three years before the date of the filing of the petition, an investment banker

for a security of the debtor, or an attorney for such an investment banker in connection with the offer,

sale, or issuance of a security of the debtor;

 (D) is not and was not, within two years before the date of the filing of the petition, a director, officer,

or employee of the debtor or of an investment banker specified in subparagraph (B) or (C) of this paragraph; and

 (E) does not have an interest materially adverse to the interest of the estate or of any class of creditors

or equity security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor or an investment banker specified in subparagraph (B) or (C) of this paragraph, or for

any other reason.

11 U.S.C. § 101(14).

Section 327 of the Bankruptcy Code provides that generally “the trustee, with the court’s approval, may employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the trustee in carrying out the trustee’s duties under [the Bankruptcy Code].” 11 U.S.C. § 327(a). Generally, local bankruptcy rules on mediation do not require

that the mediator be a “disinterested person” pursuant to 11 U.S.C § 101(14) when a mediator is

appointed in a bankruptcy case; however, a few existing rules do provide that a person selected as a

mediator may be disqualified if not disinterested under 11 U.S.C. § 101. Instead of the disinterestedness test, most local bankruptcy rules on mediation include provisions covering mediator conflicts of interest and disqualification of mediators for bias.

31. The actual occurrence rate may be slightly greater or less because three of the forty-one

counsel-respondents did not identify the number of matters in which the problem occurred. These

three were counsel in a total of seven matters.
National Survey on Mediation in Bankruptcy

24

Question 25 (for mediator-respondents):

a. Are you familiar with the term disinterested person as defined in 11 U.S.C.

§ 101(14)?

b. Would you have failed to qualify as a disinterested person if that standard had

applied to your appointment as mediator?

Nineteen mediator-respondents (4.7%) were familiar with the term

“disinterested person” and indicated that they would have failed to qualify as a

disinterested person if that standard had applied to their appointment. Fifteen

mediator-respondents identified how often such appointments occurred. (Tables

13A and 13B.) Eight identified one such matter, three identified two, two identified three, one identified four, and one identified eight, for a total of thirty-two

matters (an occurrence rate of 2.3%).32

Twenty-two mediator-respondents (5.1% of those responding to Question

25a) indicated that they were unfamiliar with the term “disinterested person.”

Table 13A

Non-Disinterested Mediators

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Percentage of Number of Percentage of

Counsel-Respondents Counsel-Respondents Mediator-Respondents Mediator-Respondents

Yes 41 4.5% 19 4.7%

No 809 89.0% 374 93.0%

Can’t say 59 6.5% 9 2.2%

Total 909* 100.0% 402** 100.0%***

Note: Data in Table 13A derived from responses to survey Questions 9 and 25.

Question 9 (for counsel-respondents):

a. Are you familiar with the term disinterested person as defined in 11 U.S.C. § 101(14)?

b. Would the mediator have failed to qualify as a disinterested person if that standard had applied to the appointment

of the mediator?

Question 25 (for mediator-respondents):

a. Are you familiar with the term disinterested person as defined in 11 U.S.C. § 101(14)?

b. Would you have failed to qualify as a disinterested person if that standard had applied to your appointment as mediator?

* One hundred thirty-four counsel-respondents did not answer Question 9b; 118 of them did not answer because they

indicated they were not familiar with the term “disinterested person.”

** Thirty-eight mediator-respondents did not answer Question 25b; 22 of them did not answer because they indicated

they were not familiar with the term “disinterested person.”

*** Total may not add to 100% due to rounding.

 

32. The actual occurrence rate may be slightly greater or less because four of the nineteen mediator-respondents did not identify the number of matters in which the problem occurred. These

four mediated a total of eighteen matters.
National Survey on Mediation in Bankruptcy

25

Table 13B

Number and Rate of Matters with Non-Disinterested Mediators

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Reported Rate of Number of Reported Rate of

Matters with Occurrence in Matters with Occurrence in

Non-Disinterested Counsel-Respondent Non-Disinterested Mediator-Respondent

Mediator Matters* Mediator Matters**

24–48+ 1.2%–2.5% 32+ 2.3%

Note: Data in Table 13B derived from responses to survey Questions 9 and 25.

Question 9 (for counsel-respondents):

a. Are you familiar with the term disinterested person as defined in 11 U.S.C. § 101(14)?

b. Would the mediator have failed to qualify as a disinterested person if that standard had applied to the appointment

of the mediator?

Question 25 (for mediator-respondents):

a. Are you familiar with the term disinterested person as defined in 11 U.S.C. § 101(14)?

b. Would you have failed to qualify as a disinterested person if that standard had applied to your appointment as mediator?

* The denominator in this calculation is the total number of matters handled by counsel who fully answered Questions 2

and 9b.

** The denominator in this calculation is the total number of matters mediated by mediators who fully answered Questions 18 and 25b.

+ Three of the 41 counsel-respondents identified in Table 13A answered yes to Question 9b but did not identify the

number of matters in which the problem occurred. Four of the 19 mediator-respondents identified in Table 13A answered

yes to Question 25b but did not identify the number of matters in which the problem occurred.

Connections Between Mediator and Judge

Question 10 (for counsel-respondents): If Fed. R. Bankr. P. 5002(b)33 had applied to

the appointment of the mediator, would the appointment have been improper because

of connections between the mediator and the presiding judge?

Question 10 asked counsel-respondents if the appointment of the mediator

would have been improper if Fed. R. Bankr. P. 5002(b) had applied to the appointment. Approximately 20% of counsel-respondents answered “can’t say.”

Nineteen counsel-respondents (1.8%) identified between eighteen and thirty-six

matters where the appointment would not have been allowed because of connections between the mediator and presiding judge, an occurrence rate of 0.9%–

1.7%. (Tables 14A and 14B.) Looking at the thirty-six matters at the upper bound,

twelve counsel-respondents identified one matter, three identified two, two identified three, and one identified twelve matters.

Question 26 (for mediator-respondents): If Fed. R. Bankr. P. 5002(b) had applied to

your appointment as mediator, would the appointment have been improper because

of connections between you and the presiding judge? (footnote omitted)

One mediator-respondent (0.2%) identified one such matter (an occurrence

rate of 0.1%). (Tables 14A and 14B.)

 

33. Fed. R. Bankr. P. 5002(b) currently provides: “A bankruptcy judge may not approve the

appointment of a person as a trustee or examiner pursuant to § 1104 of the Code or approve the

employment of a person as an attorney, accountant, appraiser, auctioneer, or other professional

person pursuant to §§ 327, 1103, or 1114 of the Code if that person is or has been so connected

with such judge or the United States trustee as to render the appointment or employment improper.”
National Survey on Mediation in Bankruptcy

26

Table 14A

Perceived Rule 5002(b) Connections Between Mediator and Judge

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Percentage of Number of Percentage of

Counsel-Respondents Counsel-Respondents Mediator-Respondents Mediator-Respondents

Yes 19 1.8% 1 0.2%

No 808 78.0% 428 98.8%

Can’t say 209 20.2% 4 0.9%

Total 1,036* 100.0% 433** 100.0%***

Note: Data in Table 14A derived from responses to survey Questions 10 and 26.

Question 10 (for counsel-respondents): If Fed. R. Bankr. P. 5002(b) had applied to the appointment of the mediator,

would the appointment have been improper because of connections between the mediator and the presiding judge?

Question 26 (for mediator-respondents): If Fed. R. Bankr. P. 5002(b) had applied to your appointment as mediator,

would the appointment have been improper because of connections between you and the presiding judge?

* Seven counsel-respondents did not answer Question 10.

**Seven mediator-respondents did not answer Question 26.

*** Total may not add to 100% due to rounding.

Table 14B

Number and Rate of Matters with Perceived Connections Between Mediator and

Judge

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Rate of Occurrence Number of Rate of Occurrence

Matters with in Counsel- Matters with in MediatorPerceived Connections Respondent Matters* Perceived Connections Respondent Matters**

18–36 0.9%–1.7% 1 0.1%

Note: Data in Table 14B derived from responses to survey Questions 10 and 26.

Question 10 (for counsel-respondents): If Fed. R. Bankr. P. 5002(b) had applied to the appointment of the mediator,

would the appointment have been improper because of connections between the mediator and the presiding judge?

Question 26 (for mediator-respondents): If Fed. R. Bankr. P. 5002(b) had applied to your appointment as mediator,

would the appointment have been improper because of connections between you and the presiding judge?

* The denominator in this calculation is the total number of matters handled by counsel who fully answered Questions 2

and 10.

** The denominator in this calculation is the total number of matters mediated by mediators who fully answered Questions 18 and 26.

Connections Between Mediator and U.S. Trustee

Question 11 (for counsel-respondents): If Fed. R. Bankr. P. 5002(b)34 had applied to

the appointment of the mediator, would the appointment have been improper because

of connections between the mediator and the U.S. trustee?

Nineteen counsel-respondents (1.8%) indicated that the appointment of the

mediator would have been improper because of connections between the mediator and the U.S. trustee if Fed. R. Bankr. P. 5002(b) had applied to the appointment. Approximately one-fourth of counsel-respondents answered “can’t say.”

Eighteen of the nineteen identified between eleven and twenty-two matters where

the appointment would not have been allowed, an occurrence rate of 0.5%–1.1%.

 

34. See supra note 33 for text of Rule 5002(b).
National Survey on Mediation in Bankruptcy

27

(Tables 15A and 15B.) Looking at the twenty-two matters at the upper bound,

fourteen counsel-respondents identified one matter and four identified two.35

Question 27 (for mediator-respondents): If Fed. R. Bankr. P. 5002(b) had applied to

your appointment as mediator, would the appointment have been improper because

of connections between you and the U.S. trustee? (footnote omitted)

Three mediator-respondents (0.7%) identified a total of five matters (an occurrence rate of 0.3%) where their appointment would have been improper under

the standard of Fed. R. Bankr. P 5002(b). (Tables 15A and 15B.) One respondent

identified one matter and two identified two matters.

Table 15A

Perceived Connections Between Mediator and U.S. Trustee

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Percentage of Number of Percentage of

Counsel-Respondents Counsel-Respondents Mediator-Respondents Mediator-Respondents

Yes 19 1.8% 3 0.7%

No 761 73.5% 424 97.9%

Can’t say 255 24.6% 6 1.4%

Total 1,035* 100.0%*** 433** 100.0%

Note: Data in Table 15A derived from responses to survey Questions 11 and 27.

Question 11 (for counsel-respondents): If Fed. R. Bankr. P. 5002(b) had applied to the appointment of the mediator,

would the appointment have been improper because of connections between the mediator and the U.S. trustee?

Question 27 (for mediator-respondents): If Fed. R. Bankr. P. 5002(b) had applied to your appointment as mediator,

would the appointment have been improper because of connections between you and the U.S. trustee?

* Eight counsel-respondents did not answer Question 11.

**Seven mediator-respondents did not answer Question 27.

*** Total may not add to 100% due to rounding.

Table 15B

Number and Rate of Matters with Perceived Connections between Mediator and

U.S. Trustee

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Rate of Occurrence Number of Rate of Occurrence

Matters with in Counsel- Matters with in MediatorPerceived Connections Respondent Matters* Perceived Connections Respondent Matters**

11–22+ 0.5%–1.1% 5 0.3%

Note: Data in Table 15B derived from responses to survey Questions 11 and 27.

Question 11 (for counsel-respondents): If Fed. R. Bankr. P. 5002(b) had applied to the appointment of the mediator,

would the appointment have been improper because of connections between the mediator and the U.S. trustee?

Question 27 (for mediator-respondents): If Fed. R. Bankr. P. 5002(b) had applied to your appointment as mediator,

would the appointment have been improper because of connections between you and the U.S. trustee?

* The denominator in this calculation is the total number of matters handled by counsel who fully answered Questions 2

and 11.

** The denominator in this calculation is the total number of matters mediated by mediators who fully answered Questions 18 and 27.

+ One of the 19 counsel-respondents identified in Table 15A answered yes to Question 11 but did not identify the number of matters in which the problem occurred.

 

35. The actual occurrence rate may be slightly greater or less because one of the nineteen

counsel-respondents did not fill in the number of matters in which the problem occurred. This one

respondent was counsel in a total of ten matters.
National Survey on Mediation in Bankruptcy

28

Survey Results: Other Issues Identified

The survey also inquired about several other issues of interest to the committee.

The discussion and tables below describe the responses given by counsel and mediators.

As discussed above, more than one counsel-respondent may be reporting on

the same matter or issue. As before, we will present a lower bound (which is 50%

of the number of matters reported by counsel-respondents) and an upper bound

(which is the total number of matters reported by counsel-respondents).

For each yes answer given by a respondent, the questionnaire also asked the

respondent to explain the circumstances and how the situation was handled. A

summary of these explanations and general comments are provided in Appendix

3.

Sua Sponte Referrals to Mediation

Question 12 (for counsel-respondents): Did a bankruptcy judge refer any matter to

mediation without a request from a party?

As described above, 1,043 respondents identified themselves as counsel representing parties in mediation. Three hundred fifty-three of these counselrespondents (34.0%) indicated that a bankruptcy judge referred at least one matter to mediation without a request from a party. Three hundred thirty-nine of the

353 identified between 236 and 472 matters with sua sponte referral (accounting

for duplicates). (Tables 16A and 16B.) These matters represent 11.6%–23.3% of all

mediated matters handled by counsel who fully responded to Questions 2 and 12.

Looking at the breakdown of the 472 matters at the upper bound, 259 counselrespondents identified one matter, fifty-seven identified two, fifteen identified

three, six identified from four to eight matters, and two identified ten.36

Table 16C shows a listing of the eighteen courts in the study and the rate of

occurrence of sua sponte referral in each district. The table also identifies which

courts specifically authorize sua sponte referral in their local ADR rules, general orders, or guidelines. Seventy-two percent of the eighteen courts in the survey included such authorization as of mid-1997. From the data in Table 16C, there is no

evident relationship between rates of sua sponte referral and local rule provisions

specifically authorizing sua sponte referral.

 

36. The actual occurrence rate may be greater or less because fourteen of the 353 counselrespondents did not fill in the number of matters in which sua sponte referral occurred. These

fourteen respondents were counsel in a total of seventy-four matters.
National Survey on Mediation in Bankruptcy

29

Table 16A

Sua Sponte Referrals to Mediation

(weighted data)

Counsel-Respondents

Number of Percentage of

Counsel-Respondents Counsel-Respondents

Yes 353 34.0%

No 656 63.2%

Can’t say 29 2.8%

Total 1,038* 100.0%

Note: Data in Table 16A derived from responses to survey Question 12.

Question 12 (for counsel-respondents): Did a bankruptcy judge refer any matter to mediation without a request from a

party?

*Five counsel-respondents did not answer Question 12.

Table 16B

Number and Rate of Matters with Sua Sponte Referral

(weighted data)

Counsel-Respondents

Number of Matters Rate of Occurrence in

with Sua Sponte Referral Counsel-Respondent Matters*

236–472+ 11.6%–23.3%

Note: Data in Table 16B derived from responses to survey Question 12.

Question 12 (for counsel-respondents): Did a bankruptcy judge refer any matter to mediation without a request from a

party?

* The denominator in this calculation is the total number of mediated matters handled by counsel who fully answered

Questions 2 and 12.

+ Fourteen of the 353 counsel-respondents identified in Table 16A answered yes to Question 12 but did not identify the

number of matters in which the a sua sponte referral occurred.
National Survey on Mediation in Bankruptcy

30

Table 16C

Rate of Sua Sponte Referral Compared to Local Rule Authorization for Sua

Sponte Referral

(N = 1,043) (weighted data)

Bankruptcy Specific Provision Rate of Occurrence

Courts in in Local Rule for of Sua Sponte

the Survey Sua Sponte Referral Referral

1.* yes 30.0%–60.0%

2.* no 27.8%–55.6%

3. yes 20.2%–40.4%

4. yes 20.0%–40.0%

5. yes 17.1%–34.2%

6. yes 13.1%–26.2%

7. yes 8.6%–17.1%

8.* yes 8.4%–16.7%

9.* no 8.4%–16.7%

10. yes 7.8%–15.6%

11. no 7.4%–14.9%

12. yes 5.6%–11.2%

13. yes 4.8%–9.5%

14. yes 3.4%–6.8%

15. yes 2.2%–4.3%

16.* yes N/A

17.* no N/A

18.* no N/A

All Districts in Survey 11.6%–23.3%

* Counsel-respondents identified 30 or fewer matters referred to mediation.

N/A—Counsel-respondents identified no sua sponte referrals.

Referrals over Objection of a Party

Question 13 (for counsel-respondents): Did a bankruptcy judge refer any matter to

mediation over the objection of a party?

Eighty-eight counsel-respondents (8.5%) indicated that a bankruptcy judge

referred at least one matter to mediation over the objection of a party. Eighty-four

of the eighty-eight identified between 68 and 137 matters with such referral.

(Tables 17A and 17B.) These matters represent 3.3%–6.6% of all mediated matters

handled by counsel who fully responded to Questions 2 and 13. Looking at the

breakdown of the 137 matters at the upper bound, seventy-one counselrespondents identified one matter, four identified two, six identified from three to

six, and three identified ten. 37

 

37. The actual occurrence rate may be slightly greater or less because four of the eighty-eight

counsel-respondents did not fill in the number of matters in which referral occurred over party

objection. These four respondents were counsel in a total of ten matters.
National Survey on Mediation in Bankruptcy

31

Table 17A

Referrals over Objection of a Party

(weighted data)

Counsel-Respondents

Number of Percentage of

Counsel-Respondents Counsel-Respondents

Yes 88 8.5%

No 929 89.7%

Can’t say 19 1.8%

Total 1,036* 100.0%

Note: Data in Table 17A derived from responses to survey Question 13.

Question 13 (for counsel-respondents): Did a bankruptcy judge refer any matter to mediation over the objection of a

party?

*Seven counsel-respondents did not answer Question 13.

Table 17B

Number and Rate of Matters Referred over Party Objection

(weighted data)

Counsel-Respondents

Number of Matters Rate of Occurrence

Referred over in Counsel-Respondent

Party Objection Matters*

68–137+ 3.3%–6.6%

Note: Data in Table 17B derived from responses to survey Question 13.

Question 13 (for counsel-respondents): Did a bankruptcy judge refer any matter to mediation over the objection of a

party?

* The denominator in this calculation is the total number of mediated matters handled by counsel who fully answered

Questions 2 and 13.

+ Four of the 88 counsel-respondents identified in Table 17A answered yes to Question 13 but did not identify the number of matters in which the referral occurred over a party’s objection.

Mediator’s Fee Paid by Bankruptcy Estate

Question 14a (for counsel-respondents): Did the bankruptcy estate pay any portion of

the mediator’s fee?

Two hundred thirty-seven counsel-respondents (22.8%) indicated that the

bankruptcy estate paid a portion of the mediator’s fee. Two hundred twenty-five

of the 237 identified between 210 and 420 such matters. (Tables 18A and 18B.)

These matters represent 10.2%–20.3% of all mediated matters handled by counsel

who fully responded to Questions 2 and 14a. Looking at the breakdown of the 420

matters at the upper bound, 141 counsel-respondents identified one matter, fortyfive identified two, twenty-one identified three, fourteen identified from four to

six, and four identified from ten to twenty-five.38

 

38. The actual occurrence rate may be greater or less because twelve of the 237 counselrespondents did not fill in the number of matters in which the bankruptcy estate paid the mediator’s fee. These twelve respondents were counsel in a total of thirty-nine matters.
National Survey on Mediation in Bankruptcy

32

Question 29a (for mediator-respondents): Did the bankruptcy estate pay any portion

of your fee?

Of the 433 mediator-respondents who answered Question 29a, eighty-nine

(20.5%) indicated that the bankruptcy estate paid a portion of their fee. Eightyfive of the eighty-nine identified 276 such matters. (Tables 18A and 18B.) These

matters represent 19.0% of all mediated matters handled by mediators who fully

responded to Questions 18 and 29a. Looking at the breakdown of the 276 matters,

forty-four mediator-respondents identified one matter, fourteen identified two,

eight identified three, thirteen identified four to nine matters, and six identified

ten to thirty-five.39

Table 18A

Mediator’s Fee Paid by Bankruptcy Estate

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Percentage of Number of Percentage of

Counsel-Respondents Counsel-Respondents Mediator-Respondents Mediator-Respondents

Yes 237 22.8% 89 20.5%

No 618 59.6% 338 78.1%

Can’t say 182 17.6% 6 1.4%

Total 1,037* 100.0% 433** 100.0%

Note: Data in Table 18A derived from responses to survey Questions 14a and 29a.

Question 14a (for counsel-respondents): Did the bankruptcy estate pay any portion of the mediator’s fee?

Question 29a (for mediator-respondents): Did the bankruptcy estate pay any portion of your fee?

* Six counsel-respondents did not answer Question 14a.

** Seven mediator-respondents did not answer Question 29a.

Table 18B

Number and Rate of Matters with Mediator Paid by Bankruptcy Estate

(weighted data)

Counsel-Respondents Mediator-Respondents

Number of Rate of Occurrence Number of Rate of Occurrence

Matters with Mediator in Counsel- Matters with Mediator in MediatorPaid by Estate Respondent Matters* Paid by Estate Respondent Matters**

210–420+ 10.2%–20.3% 276+ 19.0%

Note: Data in Table 18B derived from responses to survey Questions 14a and 29a.

Question 14a (for counsel-respondents): Did the bankruptcy estate pay any portion of the mediator’s fee?

Question 29a (for mediator-respondents): Did the bankruptcy estate pay any portion of your fee?

* The denominator in this calculation is the total number of mediated matters handled by counsel who fully answered

Questions 2 and 14a.

** The denominator in this calculation is the total number of mediated matters handled by mediators who fully answered Questions 18 and 29a.

+ Twelve of the 237 counsel-respondents identified in Table 18A answered yes to Question 14a but did not identify the

number of matters in which the mediator was paid by the estate. Four of the 89 mediator-respondents identified in Table

18A answered yes to Question 29a but did not identify the number of matters in which the mediator was paid by the estate.

 

39. The actual occurrence rate may be slightly greater or less because four of the eighty-nine

mediator-respondents did not fill in the number of matters in which the bankruptcy estate paid the

mediator’s fee. These four respondents were counsel in a total of twenty-six matters.
National Survey on Mediation in Bankruptcy

33

Mediator Role in Formulating Reorganization

Question 28 (for mediator-respondents): In your role as mediator, did you formulate

a plan of reorganization or facilitate negotiations regarding a plan of reorganization?

Eighty-two mediator-respondents (18.9%) indicated that they formulated a

plan of reorganization or facilitated negotiations regarding a plan of reorganization. Seventy-seven of the eighty-two identified 138 such matters. (Tables 19A and

19B.) These matters represent 9.4% of all mediated matters handled by mediators

who fully responded to Questions 2 and 28. Looking at the breakdown of the 138

matters, fifty-three mediator-respondents identified one matter, sixteen identified

two, five identified from three to nine, one identified ten, and one identified fifteen.40

Table 19A

Mediator Role in Formulating Plan of Reorganization

(weighted data)

Mediator-Respondents

Number of Percentage of

Mediator-Respondents Mediator-Respondents

Yes 82 18.9%

No 349 80.6%

Can’t say 2 0.5%

Total 433* 100.0%

Note: Data in Table 19A derived from responses to survey Question 28.

Question 28 (for mediator-respondents): In your role as mediator, did you formulate a plan of reorganization or facilitate negotiations regarding a plan of reorganization?

*Seven mediator-respondents did not answer Question 28.

Table 19B

Number and Rate of Matters with Mediator Role in Formulating Plan

(weighted data)

MediatorRespondents

Number of Matters Rate of Occurrence

with Mediator Role in Mediator-Respondent

in Plan Formulation Matters*

138+ 9.4%

Note: Data in Table 19B derived from responses to survey Question 28.

Question 28 (for mediator-respondents): In your role as mediator, did you formulate a plan of reorganization or facilitate negotiations regarding a plan of reorganization?

* The denominator in this calculation is the total number of mediated matters handled by mediators who fully answered

Questions 18 and 28.

+ Five of the 82 mediator-respondents identified in Table 19A answered yes to Question 28 but did not identify the

number of matters in which the mediator played a role in plan formulation.

 

40. The actual occurrence rate may be slightly greater or less because five of the eighty-two

mediator-respondents did not identify the number of matters in which the mediator played a role

in formulating a plan of reorganization. These five mediated a total of twenty-two matters.
National Survey on Mediation in Bankruptcy

34

Potential Issues for Committee Consideration

As one looks at these data, several questions come to mind. First, are observed or

perceived problems in mediation of little significance because they occur infrequently? Second, are some observed or perceived problems so serious in nature

that any occurrence of the problem, even though infrequent, warrants attention?

Third, are these matters best addressed by national rules, or should they be left to

local rules?
35

Appendix 1

Questionnaire
This page left blank intentionally for proper pagination when printing two-sided
THE FEDERAL JUDICIAL CENTER

THURGOOD MARSHALL FEDERAL JUDICIARY BUILDING

ONE COLUMBUS CIRCLE, N.E.

WASHINGTON, DC 20002-8003

RYA W. ZOBEL TEL.: 202-273-4160

DIRECTOR FAX: 202-273-4019

July 10, 1997

__________

__________

__________

__________

Dear ______:

The Judicial Conference’s Advisory Committee on Bankruptcy Rules has received a

suggestion that it consider the need to amend the Federal Rules of Bankruptcy Procedure with

respect to mediation in bankruptcy courts. At the request of the committee, we are seeking input

from practitioners who might have participated in the mediation of one or more bankruptcy

matters.

I am writing to ask you to help in this effort. Please complete the enclosed questionnaire

even if you did not participate in such a mediation. Given that only a small sample of

practitioners will receive this questionnaire, your response is very important.

Please return the questionnaire by July 31, 1997, in the envelope provided. If you have

any questions, call Bob Niemic, Project Director, at (202) 273-4070.

Sincerely,

Rya W. Zobel

U.S. District Judge

District of Massachusetts

Enclosures
NATIONAL SURVEY ON MEDIATION IN BANKRUPTCY:

QUESTIONNAIRE FOR MEDIATION PARTICIPANTS

For the Advisory Committee on Bankruptcy Rules

of the Judicial Conference of the United States

Designed and administered by the Federal Judicial Center

C E N T E R

F E D

E

R A L

J U D I C I A L

Instructions

Purpose of This Questionnaire

This questionnaire seeks your views on mediation in bankruptcy cases. The Federal Judicial

Center, an independent research and education agency within the federal judiciary, developed the

questionnaire at the request of the Judicial Conference’s Advisory Committee on Bankruptcy

Rules. The Judicial Conference is the policymaking body for the federal courts. The committee

has not taken a position on the use of mediation in bankruptcy cases. The survey is part of the

committee’s preliminary look at whether there is a need for national rules to govern mediation.

Definitions

As used in this questionnaire:

Mediation refers to a nonbinding dispute resolution process in which a mediator (an impartial

third party other than a bankruptcy judge) facilitates negotiations between parties to a dispute to

help them reach settlement.

Matter refers to any motion, contested matter, adversary proceeding, plan formulation, plan

negotiation, or other matter in a bankruptcy case.

Confidentiality

Information collected in this survey will be reported in aggregate form only, and no individual

respondent will be identified. The code number on the questionnaire will be used only to follow

up with those who do not respond.

Answering the Questionnaire

If you need more space to answer any question, please use the “General Comments” section at

the end or attach additional sheets of paper. Please give the number of the question you are

answering. If you have questions concerning the survey, please call Bob Niemic, Project

Director, at (202) 273-4070.

Returning the Questionnaire

Please return the questionnaire in the enclosed envelope.
National Survey on Mediation in Bankruptcy Federal Judicial Center July 1997

____________________________________________________________________________________________

1

Questionnaire

1. During the past 36 months, did you participate as an attorney for a party in the mediation

of any matter referred to mediation by a bankruptcy judge sua sponte or at the request of a

party or parties?

 Please check one: ❑1 No--------> Go to Question 17, page 5.

❑2 Yes

Questions 2-16 are to be answered by those who participated as an attorney for a party.

2. In how many of the matters described in Question 1 did you participate as an attorney for a

party?

________ matters

For Questions 3–14:

“No” = did not occur in any matter included in Question 2.

“Yes” = occurred in one or more of the matters included in Question 2.

“Can’t say” = don’t know or can’t answer.

3. During or after the mediation, did the mediator disclose without permission any statements

made or materials used in the mediation?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

4. During or after the mediation, did any of the parties to the mediation or their counsel disclose

without permission any statements made or materials used in the mediation?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say
National Survey on Mediation in Bankruptcy Federal Judicial Center July 1997

____________________________________________________________________________________________

2

5. Did the confidentiality requirements of the mediation process prevent the bankruptcy judge

from learning facts or issues that the judge would have needed to know in deciding whether

to approve a settlement of the matter that was mediated?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

6. Were there ex parte contacts between the mediator and the judge that were not authorized by

the parties?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

7. Did the mediator fail to timely disclose a conflict of interest that the mediator had?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

8. Should the mediator have been disqualified for bias or prejudice?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

9. a. Are you familiar with the term disinterested person as defined in 11 U.S.C. § 101(14)?

Please check one: ❑1 No-------->Go to Question 10

❑2 Yes

b. Would the mediator have failed to qualify as a disinterested person if that standard had

applied to the appointment of the mediator?

Please check one: ❑1 No

❑2 Yes-------->In how many matters? _______

❑3 Can’t say
National Survey on Mediation in Bankruptcy Federal Judicial Center July 1997

____________________________________________________________________________________________

3

10. If Fed. R. Bankr. P. 5002(b)∗ had applied to the appointment of the mediator, would the

appointment have been improper because of connections between the mediator and the

presiding judge?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

11. If Fed. R. Bankr. P. 5002(b) had applied to the appointment of the mediator, would the

appointment have been improper because of connections between the mediator and the U.S.

trustee?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

12. Did a bankruptcy judge refer any matter to mediation without a request from a party?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

13. Did a bankruptcy judge refer any matter to mediation over the objection of a party?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

14. a. Did the bankruptcy estate pay any portion of the mediator’s fee?

Please check one: ❑1 No--------> Go to Question 15

❑2 Yes-------->In how many matters? _______

❑3 Can’t say

b. In how many of the matters identified in Question 14.a was the debtor one of the parties

at the mediation?

________ matters

 

∗

 Fed. R. Bankr. P. 5002(b) currently provides:

A bankruptcy judge may not approve the appointment of a person as a trustee or examiner pursuant to § 1104 of the

Code or approve the employment of a person as an attorney, accountant, appraiser, auctioneer, or other professional

person pursuant to §§ 327, 1103, or 1114 of the Code if that person is or has been so connected with such judge or the

United States trustee as to render the appointment or employment improper.
National Survey on Mediation in Bankruptcy Federal Judicial Center July 1997

____________________________________________________________________________________________

4

15. For each “yes” answer you gave in Questions 3–14, please explain the circumstances and

how the situation was handled, if applicable. Please give the question number with each

explanation. Otherwise, go to Question 16.

16. a. In any of the bankruptcy matters in which you participated, do you know of any problems

not identified above that occurred with respect to mediation?

Please check one: ❑1 No--------> Go to Question 17

❑2 Yes

b. Please identify the problem(s) and in how many matters they occurred:
National Survey on Mediation in Bankruptcy Federal Judicial Center July 1997

____________________________________________________________________________________________

5

17. During the past 36 months, did you participate as a mediator in any matter referred to

mediation by a bankruptcy judge sua sponte or at the request of a party or parties?

Please check one: ❑1

 No--------> Go to Question 32, page 9.

❑2 Yes

Questions 18-31 are to be answered by those who participated as a mediator.

18. In how many of the matters described in Question 17 did you participate as a mediator?

 ________ matters

For Questions 19–29:

“No” = did not occur in any matter included in Question 18.

“Yes” = occurred in one or more of the matters included in Question 18.

“Can’t say” = don’t know or can’t answer.

19. Did any of the parties to the mediation assert that, during or after the mediation, you

disclosed without permission any statements made or materials used in the mediation?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

20. During or after the mediation, did any of the parties to the mediation or their counsel disclose

without permission any statements made or materials used in the mediation?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

21. Did the confidentiality requirements of the mediation process prevent the bankruptcy judge

from learning facts or issues that the judge would have needed to know in deciding whether

to approve a settlement of the matter that was mediated?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say
National Survey on Mediation in Bankruptcy Federal Judicial Center July 1997

____________________________________________________________________________________________

6

22. Were there ex parte contacts between you and the judge that were not authorized by the

parties?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

23. Did any of the parties to the mediation assert that you failed to timely disclose a conflict of

interest that you allegedly had?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

24. Did any of the parties to the mediation assert that you should have been disqualified for bias

or prejudice?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

25. a. Are you familiar with the term disinterested person as defined in 11 U.S.C. § 101(14)?

Please check one: ❑1 No-------->Go to Question 26

❑2 Yes

b. Would you have failed to qualify as a disinterested person if that standard had applied to

your appointment as mediator?

Please check one: ❑1 No

❑2 Yes-------->In how many matters? _______

❑3 Can’t say
National Survey on Mediation in Bankruptcy Federal Judicial Center July 1997

____________________________________________________________________________________________

7

26. If Fed. R. Bankr. P. 5002(b)∗ had applied to your appointment as mediator, would the

appointment have been improper because of connections between you and the presiding

judge?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

27. If Fed. R. Bankr. P. 5002(b) had applied to your appointment as mediator, would the

appointment have been improper because of connections between you and the U.S. trustee?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

28. In your role as mediator, did you formulate a plan of reorganization or facilitate negotiations

regarding a plan of reorganization?

Please check one: ❑1 No

❑2

 Yes-------->In how many matters? _______

❑3

 Can’t say

29. a. Did the bankruptcy estate pay any portion of your fee?

Please check one: ❑1 No--------> Go to Question 30

❑2 Yes-------->In how many matters? _______

❑3 Can’t say

b. In how many of the matters identified in Question 29.a was the debtor one of the parties

at the mediation?

________ matters

 

∗

 Fed. R. Bankr. P. 5002(b) currently provides:

A bankruptcy judge may not approve the appointment of a person as a trustee or examiner pursuant to § 1104 of the

Code or approve the employment of a person as an attorney, accountant, appraiser, auctioneer, or other professional

person pursuant to §§ 327, 1103, or 1114 of the Code if that person is or has been so connected with such judge or the

United States trustee as to render the appointment or employment improper.
National Survey on Mediation in Bankruptcy Federal Judicial Center July 1997

____________________________________________________________________________________________

8

30. For each “yes” answer you gave in Questions 19–29, please explain the circumstances and

how the situation was handled, if applicable. Please give the question number with each

explanation. Otherwise, go to Question 31.

31. a. In any of the bankruptcy matters in which you participated, do you know of any problems

not identified above that occurred with respect to mediation?

Please check one: ❑1 No--------> Go to Question 32

❑2 Yes

b. Please identify the problem(s) and in how many matters they occurred:
National Survey on Mediation in Bankruptcy Federal Judicial Center July 1997

____________________________________________________________________________________________

9

32. Please identify each area that has accounted for 20% or more of your entire practice over the

past three years.

Please check all that apply:

❑1 Representing creditors in consumer bankruptcy cases

❑2 Representing debtors in consumer bankruptcy cases

❑3 Representing creditors in business bankruptcy cases

❑4 Representing debtors in business bankruptcy cases

❑5 Serving as an attorney for bankruptcy trustees (specify chapter(s): _____________)

❑6 Serving as a bankruptcy trustee (specify chapter(s): _____________)

❑7 Serving as a mediator

❑8 Other------->Please specify: ________________________________________

33. For how many years have you been working, full or part time, in bankruptcy practice areas?

_______ years

34. May we contact you to discuss your written responses in more detail?

Please check one: ❑1

 No

❑2

 Yes-------->Please provide your name and telephone number:

Name: _________________________________

Phone: (_____) ______ - ___________________
National Survey on Mediation in Bankruptcy Federal Judicial Center July 1997

____________________________________________________________________________________________

10

General Comments

Please use the space below to add any comments you think would assist the Advisory Committee

on Bankruptcy Rules in its consideration of the need for rules on mediation. (Use the reverse side

or additional pages if necessary.)

THANK YOU!

Please return the questionnaire in the enclosed envelope addressed to: Federal Judicial Center (RES),

One Columbus Circle, N.E., Washington, DC 20077-0002.
49

Appendix 2

Methods

As of May 1997, the Center knew of twenty-four bankruptcy courts that had local

rules, general orders, or guidelines that governed judicial referral of bankruptcy

matters to mediation. These courts are listed below:

Northern District of Alabama District of Kansas

District of Alaska Eastern District of Louisiana

Central District of California Eastern District of Michigan (Southern Division)

Eastern District of California District of Nebraska

Northern District of California District of New Jersey

Southern District of California Southern District of New York

District of Colorado Eastern District of North Carolina41

Middle District of Florida District of Oregon

Southern District of Florida Eastern District of Pennsylvania

District of Idaho Northern District of Texas

Northern District of Illinois District of Utah

Northern District of Indiana Eastern District of Virginia (Alexandria Division)

In addition, the Center had learned that the bankruptcy courts for Southern

and Western Districts of Texas use district court mediation procedures, but without specific mention in their local bankruptcy rules.

We believe these twenty-six courts42 represent all of the bankruptcy courts that

had rules, orders, or guidelines on mediation in effect or that have used, with

some regularity, district court rules for referral to mediation as of July 10, 1997—

that is, the date the questionnaire was mailed.

On May 13, 1997, we asked the clerk in each of these twenty-six bankruptcy

courts to provide us with two lists as follows:

• The names and addresses of mediators who mediated one or more mediation sessions in one or more matters over the past three years. (The courts

were asked to include mediated matters where all parties were represented by

counsel as well as those where one or more parties appeared pro se/pro per.)

 

41. The Bankruptcy Administrator’s Pilot Mediation Program was in existence during the survey period. Subsequently, effective Oct. 1, 1997, the court adopted a local rule on mediated settlement conferences.

42. Five courts that currently have mediation programs were not included in the survey because the programs were not fully or formally operational as of May 1997. Effective Aug. 1, 1997,

the Bankruptcy Court for the District of Massachusetts adopted a local rule on mediation. Effective

Aug. 13, 1997, the Bankruptcy Court for the Western District of Pennsylvania adopted a general

order on mediation. Effective Dec. 1, 1996, the Bankruptcy Court for the Northern Tier of the

Middle District of Pennsylvania adopted a Bankruptcy Practice Order on mediation; however, no

roster of mediators was established as of May 1997. In addition, the Bankruptcy Courts for the

Northern District of Ohio and the Northern District of Oklahoma recently began referring cases to

mediation using a procedure similar to that used in their district courts, although a local bankruptcy rule on mediation has not yet been issued.
National Survey on Mediation in Bankruptcy

50

• The names and addresses of counsel who represented a party or parties in

one or more mediation sessions in one or more bankruptcy matters over the

past three years. (The courts were asked to exclude, if possible, any pro

se/pro per parties, other than those who are themselves attorneys.)

As of May 30, 1997, six of the twenty-six courts reported that no mediations

had occurred pursuant to their local rules and therefore these courts did not provide lists. These courts are Alaska, Idaho,43 Illinois Northern, Louisiana Eastern,

Michigan Eastern (Southern Division), and North Carolina Eastern. All but one of

these programs (North Carolina Eastern’s Bankruptcy Administrator Pilot Mediation Program) were adopted within the past one or two years.

The clerks of the bankruptcy courts for the District of Colorado and the

Northern District of Texas informed us that those courts do not maintain any information on matters referred to mediation.

Eighteen of the twenty-six courts provided us with lists. The list provided by

the Northern District of Alabama, however, includes only counsel who represented parties in matters referred to mediation. The court could not provide a list

of mediators.

In two of the eighteen districts, the clerk of court was not able to provide us

with the names of all counsel who represented parties in mediated matters during

the relevant three year period. First, the Eastern District of Pennsylvania could not

readily identify the names of counsel who represented parties in matters referred

to mediation. Instead, the court gave us a list of the 311 matters (with main case

and adversary proceeding numbers) referred to mediation by the court over the

relevant three year period. Center staff extracted counsel names for these cases and

proceedings from the court-maintained database called Public Access to Court

Electronic Records (PACER). This method most likely included some counsel who

were involved in these cases but who did not represent a party in a matter referred

to mediation. For contested matters, this method would not provide the names of

counsel who represented a party unless that attorney was counsel in the case-inchief, because PACER does not maintain counsel of record information for contested matters. After these searches for counsel names, case-identifiable information was not associated with the mailing or receipt of questionnaires nor was it, or

will it be, used for the review of responses or survey data.

Second, the Southern District of New York was able to provide a list of all mediators who participated in mediations and, for most matters, the names of counsel that appeared on service lists attached to the orders appointing the mediators.

However, there were no service lists available for twelve cases. In a process similar

to that used for the Eastern District of Pennsylvania, Center staff extracted counsel

names for these twelve cases and proceedings from PACER. As for the Eastern District of Pennsylvania, case-identifiable information was not linked during the

questionnaire and data analysis processes and, as with all questionnaires in the

survey, the confidentiality of all respondents and responses has been and will be

preserved.

 

43. One adversary proceeding, referred to mediation, settled before the scheduled mediation.
National Survey on Mediation in Bankruptcy

51

The questionnaire was sent to a 100% sample of the names on the counsel and

mediator lists for all but one of the eighteen bankruptcy courts listed above. See

Table 3 for the number of questionnaires sent by district. Because of the large

number of matters referred to mediation in the Central District of California, we

selected a random sample of 50% of the practitioners in that district. Data contained in this report for that district has been weighted up by a factor of two, in

order to account for the 50% sample.
This page left blank intentionally for proper pagination when printing two-sided
53

Appendix 3

Summary of Respondent Comments

Summary of General Comments

(Counsel and Mediator Respondents’ Comments Given at the End of the Questionnaire)

1. Mediation has disadvantages (N = 32)

2. Mediation has benefits—generally (N = 84)

3. Mediation in my district works well (N = 19)

4. More mediation should be encouraged (N = 15)

5. Mediation saves clients’ money and the court’s time (N = 14)

6. Mediation is appropriate for bankruptcy matters (N = 8)

7. Leave national rules alone—generally (N = 17)

8. Make rule changes—generally (N = 28)

9. Do not make mediation mandatory (N = 14)

10. Make mediation mandatory (N = 10)

11. Make improvements to the mediation process—generally (N = 30)

12. Mediators should be paid (N = 14)

13. Mediators should serve voluntarily (N = 3)

14. Improve the appointment of mediators (N = 8)

15. Provide more mediator training (N = 8)

16. Mediator professionalism should be maintained at a high level (N = 7)

Summary of Responses to Question 16b

(Counsel-Respondents’ Identification of Problems Not Identified in Questions 3–15)

1. Mediation has disadvantages (N = 24)

2. Mediation has benefits—generally (N = 5)

3. Mediation saves clients’ money and the court’s time (N = 1)

4. Make rule changes—generally (N = 4)

5. Do not make mediation mandatory (N = 1)

6. Make improvements to the mediation process—generally (N = 1)

7. Mediators should be paid (N = 5)

8. Mediators should serve voluntarily (N = 1)

9. Improve the appointment of mediators (N = 3)

10. Provide more mediator training (N = 9)

11. Mediator professionalism should be maintained at a high level (N = 8)

Summary of Responses to Question 31b

(Mediator-Respondents’ Identification of Problems Not Identified in Questions 19–30)

1. Mediation has disadvantages (N = 7)

2. Mediation has benefits—generally (N = 2)

3. Make rule changes—generally (N = 6)

4. Make improvements to the mediation process—generally (N = 33)

5. Mediators should be paid (N = 3)
National Survey on Mediation in Bankruptcy

54

Counsel-Respondents’ Explanations of Yes Responses to Questions 3–14

(Excerpts from Representative Responses to Question 15)

Question 3—Mediator Disclosure Problems

My sense is that the mediator consistently has passed information to other parties. My client has no faith in the mediator or the mediation which has now failed.

At one of my mediations, the mediator revealed my confidential assessments to the other

side. We eventually settled.

The mediator’s report included statements made and material disclosed during mediation.

Question 4—Party Disclosure Problems

In two of three mediations, the items discussed at mediation were routinely discussed

before the bankruptcy judge.

Opposing counsel purported to quote, in an oral argument, something that my client had

said in mediation.

A pro se (pro per) party had a mental disorder and did not fully understand the confidentiality agreement.

Party attempted to introduce settlement discussion in trial brief.

Disclosed what we had to and nobody objected.

Opposing counsel filed a motion for sanctions against my client in which he made impermissible disclosures.

Question 5—Confidentiality Prevented Judge from Gaining Information for

Approval of Settlement

It was explained to the judge that important tradeoffs had been negotiated, at considerable length. The judge specifically asked the debtor to indicate whether he was voluntarily,

and with understanding of its consequences, accepting the mediated settlement.

The parties reached a conditional agreement that required the debtor to obtain a new

loan. When the debtor could not obtain the loan, the debtor proposed a plan with substantial litigation over the appropriate interest rates. The court held the privilege

[mediation confidentiality] extended to all discussions between the debtor and lender

concerning interest rates after the mediation since those discussions related to the agreement reached in mediation.

Question 6—Ex Parte Contacts Between Mediator and Judge

The mediator has told me of contacts with the judge. We did not consider it beneficial to

take action in response.

Judge disclosed that he had talked to the mediator and that he knew we had been successful. Nothing inappropriate was discussed.
National Survey on Mediation in Bankruptcy

55

Question 7—Mediator’s Failure to Disclose Conflict of Interest

Party in mediation revealed to counsel that party had consulted with this mediator previously. Mediator denied any recollection.

The first appointed mediator did not disclose that he had a conflict of interest for several

weeks (probably five or six weeks). As a result, establishing the scheduled date for mediation was delayed by many weeks because we had to go through the appointment process

all over again.

In two cases I agreed and, in fact, requested a specific mediat[or] (local bankruptcy lawyer) whom I knew to be conflicted. I waived the conflict because this is a great mediator.

The bankruptcy courts and its practitioners are representatives of a closed society. The

best people sometimes have technical conflicts. So what? No one has to settle if they don't

want to.

Question 8—Mediator Bias or Prejudice Problems

In both matters, the mediator chose to ignore one of the parties to the mediation and

presented that party with a fait accompli. In at least one matter, the fait accompli severely

and unfairly impaired the rights of unsecured creditors.

In one case the court appointed an examiner who became the mediator of many disputed

issues in the case. This was highly improper. The examiner/mediator said that if a party

did not go along with a suggested resolution [the examiner] would make an unfavorable

recommendation to the judge.

Mediator was promised appointment as a trustee of emerging . . . [entity] if plan confirmed. Other party . . . determined not to make an issue of that.

The mediator aligned . . . with the trustee because of . . . close ties to the trustee in a former practice.

Question 9(b)—Non-Disinterested Mediator Issue

Mediator had mediated a prior dispute involving some of the parties. Disclosed to parties.

Mediation proceeded with consent.

[The] [m]ediator had been in practice with [the] creditor’s attorney. Conflict was disclosed up-front and end result was fair.

[The] [m]ediator had previously participated in case as attorney, as known by all parties.

Attorney for defendants and mediator had very close mutual relationship and knew each

other’s approach to matters. Because mediation was not binding, plaintiff went ahead

with mediation and adversary action was settled.

[T]he mediator also served as our examiner. No one chose to object to . . . appointment at

this time.

Question 10—Perceived Rule 5002(b) Connections Between Mediator and Judge

The mediator is known to be a close friend of the judge. The parties either didn’t care or

thought this was a benefit because the mediator could give recalcitrant parties his “read”

of what the judge might rule based on his knowledge of the judge.
National Survey on Mediation in Bankruptcy

56

A case was referred by a bankruptcy judge to his former partner and one of his closest

friends. However, I thought the mediator did an excellent job and have no reason to believe there was any improper contact.

[The] mediator used to practice at same firm with [the] judge but now is a solo practitioner.

Connections between mediator and presiding judge were known and disclosed by presiding judge and by mediator. Parties waived or had no problem with relationship.

Question 11—Perceived Rule 5002(b) Connections Between Mediator and U.S.

Trustee

The mediator was a former U.S. trustee.

Trustee served as mediator after stipulation by counsel and parties that trustee could act

as mediator.

The mediator was on the trustee panel.

Question 12—Sua Sponte Referral

[Judge] strongly suggested mediation and the parties reluctantly concurred. It was a wise

suggestion by an able judge.

The bankruptcy judge initiated the mediation sua sponte, without any request from either

party. However, both sides agreed to the mediation and it was successful in resolving the

matter.

The judge suggested mediation before the parties were about to start a series of depositions. Both parties agreed with court’s suggestion.

Bankruptcy judge urged parties to mediate and allowed parties to suggest mediator.

Upon hearing that the parties had been engaging in settlement talks, the bankruptcy judge

sent the matter to mediation rather than fix a trial date. However, this was not opposed

by either party.

Judge appointed mediator sua sponte from bench in adversary proceeding including

claims by debtor-tenant against landlord . . . . Had either party not consented to this . . .

arrangement, judge would in all likelihood [have] been biased against such party for duration of adversary proceeding.

Case involved [matter type]—Judge felt that mediation would be cheaper and in interest

of preserving [the asset] as opposed to litigation.

The bankruptcy judge referred the mediation because he felt the case was “just a matter

about money” ripe for mediation. The parties, who tried unsuccessfully for years to settle,

reluctantly agreed.

Bankruptcy judges frequently “force” mediation—either by ordering it or putting the

parties in an untenable position [so] that they are better off trying mediation.

First notice from the court came with a strong advisory for mediation.
National Survey on Mediation in Bankruptcy

57

I believe, maybe wrongly, that mediation is mandatory with [judge’s name] of the

[district]: While helpful in many instances this mediation can often be misleading or coercive particularly if automatic.

The judge sends out a pretrial order directing the parties to file a joint statement of

whether they consent to mediation.

Court assigned [case] to mediation without prior request to consent with respect to preference actions. [P]arties, rather than alienating court, merely proceeded with same.

Mandatory mediation of adversary complaint per [court’s orders]. If [we] objected, [we]

had to give reason why [we did] not want mediation. Case settled prior to mediation

hearing.

[Judge] ordered sua sponte that the parties mediate all disputed issues prior to any contested confirmation hearing.

Having the judge insist on mediation before setting it for trial motivated the parties to

pursue alternatives to trial.

Opposing counsel advised the judge that mediation would not be productive; the judge

twisted the attorney’s arm; the resulting mediations settled the cases.

Technically speaking, one makes no “objection” to such a pronouncement from the

bench because practitioners, such as myself, appear repeatedly before the same bankruptcy judges representing the same creditors against numerous different debtors on

similar causes of action. I have found it to be “politically” unwise to refuse to go to mediation.

Bankruptcy judges in [district] are always referring matters to mediation, whether the

parties want it or not.

Our district is aggressive re mediation.

The judge explained the mediation process and [that] they were having very good results.

Cases involving small dollar amount in controversy are routinely referred to mediation by

judges so as to free up court resources for more complex cases and those involving greater

than $10,000. This is also beneficial to the parties who save money in attorney fees.

As stated, the judge did not “order”—he “strongly” suggested mediation.

Sua sponte appointment of an “examiner” to serve as a mediator and plan facilitator in

connection with [a] dispute.

Bankruptcy judge appointed mediator to facilitate plan discussions. Despite the judge’s

view to the contrary, we (and other principal parties) felt there was no contribution.

Question 13—Referral Over Party Objection

My client objected to mediation as a delay tactic being used by the opposing counsel. Our

objection was overruled and we went through a lengthy, costly, and unsuccessful mediation, which appeared to be a delay tactic after all.

Referred over objection [of] one party. I also had [a] case where [the] judge denied [a]

motion to mediate; sustaining objection of trustees.

Three out of four parties supported mediation. The fourth eventually caved in.
National Survey on Mediation in Bankruptcy

58

Judge directed mediation over objection of parties. Parties selected mediator. One party

refused to obtain authority to settle. Case was tried.

We represented a creditor; debtor disputed basis/amount of claim. We felt that mediation

would not be useful unless the court decided some legal issues first. The court declined,

and the mediation was unsuccessful.

This case could not be resolved in mediation. The court knew that fact from the beginning. We were charged [approximately $2000] for the mediator to talk for four hours. I

told him (mediator) [during] the first hour that it could not be resolved.

Party initially objected; then relented. Mediation not successful.

Mediation ordered even though both sides said they knew it would be unsuccessful.

My recollection is that the debtor filed an objection to the mediation because of the expense and I agreed he could participate at the mediation pro se. The court agreed to this

arrangement.

Under [district] rules judge can assign case to mediation without consent of parties. The

process proved a waste of time and money since parties had no interest in settlement.

One of the creditors objected to mediation but ultimately caved, and the matter was actually resolved through mediation.

Debtor and plaintiff in adversary proceeding did not want to engage in further settlement

discussions. Creditor and defendant did want to engage in such settlement talks and

urged the court to order the matter to mediation.

Judge insisted on mediation in a fraud lawsuit brought by chapter 7 trustee against an individual who had entered into a preference settlement with the trustee under false pretenses.

Our district is aggressive regarding mediation.

One party objected but the judge persisted and the process worked well and at minimal

cost.

The matter did not resolve and the mediation was aborted due to the bad faith of one

party and its counsel.

Question 14—Bankruptcy Estate Paid Mediator’s Fee

The debtor paid half of the cost. The debtor was a party.

Each side split costs 50-50.

It has been my experience that the debtor always pays its percentage share of the mediation fees.

The mediator applied for fees.

It seems to me that the estate should always pay for any mediation when it is the primary

litigant. No different than court reporters, U.S. trustee, etc.

[In the] first matter, I represented a defendant. The settlement allocated the costs to the

estate along with defendant’s payment. [In the] second matter, [the] estate agreed to pay

its own costs as a party.
National Survey on Mediation in Bankruptcy

59

Local rules require the parties to split the cost.

Whole fee was paid (full attorney hourly rate) by estate as [an] administrative expense.

[Fee paid] as part of the negotiated mediation agreement.

Debtor in chapter 11 case merely paid funds as an ordinary cost.

In the order referring the parties to mediation, the bankruptcy judge directed that the estate pay the mediator’s hourly rate.

We sought court approval to pay the trustee’s share of the mediator’s fees from the estate.

In one chapter 11, mediator was hired as a professional and paid by the estate.

Payment was approved by the court as part of the mediat[ion] order.

If bankruptcy estate is involved it should pay its share, with approval of court. The judge

sometimes limits how much the estate can pay.

Fees were paid from the estate pursuant to a plan that contemplated mediation of multiple similar cases before litigation.

In each case an application to appoint mediator and pay from the estate was filed, noticed

to all parties in interest and approved by order of the court.
National Survey on Mediation in Bankruptcy

60

Mediator-Respondents’ Explanations of “Yes” Responses to Questions 19–29

(Excerpts from Representative Responses to Question 30)

Question 19—Parties Asserted Mediator Disclosed Mediation Information

[O]ur local rules build in requirements of 28 U.S.C. 455 for mediators.

Debtor’s counsel thought it was inappropriate for me as mediator to invite creditors’

committee counsel into the mediation of a dispute between the debtor and a significant

creditor. Debtor’s counsel stated that my doing so violated the confidentiality of the mediation. Despite these protests, I invited committee counsel into the mediation and, as a

result, the dispute settled.

Question 20—Party Disclosure Problems

Counsel utilized disclosures on subsequent motions in the case. Despite my admonishing

him not to do so, counsel continued to utilize the disclosed information in subsequent

pleadings.

I called [an] instance [of disclosure] to the attention of the court. The subject attorney

denied being bound on confidentiality since he represented the creditors’ committee

which [existed] prior to the mediation. He also forgot having signed a confidentiality order.

Question 21—Confidentiality Prevented Judge from Gaining Information for

Approval of Settlement

The parties were willing to admit to holes in their theories and evidence problems that

they would not have been required to disclose to the court.

Facts about claimant which would not have come out in trial were discussed and considered.

The debtor in this mediation was only the conduit between the parties in the adversary

proceeding. The detail learned in mediation will never fully be exposed in the judicial

process.

Question 22—Ex Parte Contacts Alleged Between Mediator and Judge

The bankruptcy judge called me aside one day after learning I was the mediator in the

case and let me know he really wanted to see the case settle. The dispute had been going

on for several years with one appeal . . . .

Question 23—Parties Asserted that Mediator Failed to Disclose Conflict of

Interest

One of the parties was a former [contractor] of my firm which the firm had sued . . . .

When I disclosed this to the parties, the former [contractor] objected to my appointment

and an alternate mediator was used.
National Survey on Mediation in Bankruptcy

61

My office represented a bankruptcy trustee in pending matters in a mediation in which

the trustee was a party (in his capacity as trustee). In each case I obtained written waivers

as required by local rules and [state] rules of professional conduct.

Question 24—Bias or Prejudice Problem with Mediator

No comments.

Question 25(b)—Non-Disinterested Mediator Issue

In one matter, I had been involved in the bankruptcy case at an earlier point in time as

counsel for a major party. My client had subsequently been paid in full and was no longer

involved. I disclosed all this to the parties (who had selected [me]) and they felt I was not

a problem.

The parties knew the facts and consented.

The court approved me as mediator despite the disinterestedness concern because I had

the most knowledge regarding the dispute (disputes related to claims).

In two mediations . . . I was representing a purchaser of [a certain number of] stores.

Subsequently (but during the time I was still representing the buyer), I was asked by the

parties and the court to conduct the mediations. I obtained waiver from each party.

I disqualified myself with consent of the parties.

Question 26—Perceived Rule 5002(b) Connections Between Mediator and Judge

No comments.

Question 27—Perceived Rule 5002(b) Connections Between Mediator and U.S.

Trustee

I am an assistant United States trustee. Both mediations involved dischargeability.

Question 28—Mediator Helped Formulate Reorganization Plan

In mediating a relief from stay on commercial property in a chapter 11, I pointed out

some common sense approaches to a plan which had not been obvious to the parties and

which resolved many of the contested issues.

I do not believe the issue of referral was ever stated to be the formulation of a plan, but in

the process of the mediation, that was determined by the parties to be the ultimate issue.

After efforts to formulate consensual plan with debtor and creditors failed, [I] helped

structure creditor proposed plan.

Complex resolution of intellectual property dispute result[ed] in [plan of reorganization]

providing debtor license . . . and restructured payment terms.

Case resulted in prenegotiated plan involving mortgage restructuring.
National Survey on Mediation in Bankruptcy

62

I suggested outline of plan that would minimize conflict of parties and permit debtor to

reorganize.

Plan negotiations broke down almost immediately, and the parties walked out.

The issue being mediated involved plan feasibility.

Both situations involved simple plans where there was only one adverse party to debtor.

Mediation was used to resolve disputes which allowed a consensual plan to be proposed

and confirmed.

In one matter, the dispute was the linchpin to resolving the case. As such, plan issues were

involved in the solution.

Question 29—Bankruptcy Estate Paid Mediator Fee

I submitted a fee application, which was approved on shortened notice.

In all my mediations, the parties agree to be jointly liable for the mediator’s fees and disbursements and their agreement is embodied in a court order.

Estate paid half of my fee and creditor paid the other half. Court authorized the debtor’s

payment.

The estate and opposing parties shared my fee in equal shares.

[Fee] paid as expense of administration.

We stipulated, and the court ordered, that the estate would bear one-half of the fee.

The mediation fee was divided equally between the parties and application has been made

to the court for payment from the estate’s general funds.

There was a standing order permitting the debtor to pay all mediator fees without prior

court approval, so long as fees/mediation occurred within certain parameters as part of

liquidation.

The chapter 7 trustee was a party to mediation and the estate paid its share of my fee.

[The] court appoints mediator and sets an hourly rate. Mediator applies for compensation, which court must approve. Parties split the mediator’s fee.

In each case an application to appoint mediator and pay from the estate was filed, noticed

to all parties in interest and approved by order of the court.

Mediation is free in our jurisdiction.
63

Appendix 4

Possible Second Phase of Survey

After the committee reviews the results contained in this report, it might consider

whether it wants the Center to initiate a second phase of the survey. In the second

phase, newly designed questionnaires could be sent to all bankruptcy judges, all

bankruptcy clerks, selected bankruptcy-related organizations, and a sample of

bankruptcy practitioners.44 The questionnaires would address any notable specific

areas of concern that were identified in the responses to the questionnaires in the

first phase. Responses to the second phase questionnaires could also provide specific guidance and views on:

• Whether there is an expressed need for national rules on mediation and,

• If there is,

– Whether mediation-related provisions should be centralized in one new

national rule;

– Whether mediation-related provisions should be treated as amendments

to various existing national rules, with placement of each provision dependent on the subject matter of the provision; or

– Whether mediation-related provisions should be centralized in one new

national rule and cross-referenced in the appropriate existing rules.

The Center also could conduct follow-up interviews with certain respondents

to the first phase questionnaire who identified major problems in the mediation

process and who stated in their answers to Question 34 that they would allow the

Center to contact them to discuss their responses in more detail.

 

44. Those who would receive questionnaires in phase two could be selected in a manner similar to that used for the Center’s 1995 survey on bankruptcy rules. See Elizabeth C. Wiggins et al.,

Survey on the Federal Rules of Bankruptcy Procedure 3–4 (Federal Judicial Center 1996).